Reform der kommunalen Finanzbeziehungen: Kommunale Umsatzsteuerbeteiligung unter Gewerbesteuer-Wettbewerbselementen / Reform of Local Fiscal Relationships: Communal Share of German Value-added Tax with Elements of Interregional Business Tax Competition

Mudrack Tony ()
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Mudrack Tony: Forster Straße 72, 03159 Döbern, Germany

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2007, vol. 227, issue 4, 381-402

Abstract: The Business tax in Germany (German: Gewerbesteuer) has remained a continuous problem in spite of the recent economic boom. There has been a dramatic resurgence of populist voices calling for the abolition of the German Business tax.Regardless of these debates, the structural deficits of the business tax are undeniable. As one of the main sources of tax revenues for German local authority it is subject to tremendous economic cycle volatility, because it is widely perceived as being a tax on profit. A further problem is that many other problems concerning tax-based deficiencies within the German Business tax law are arising. Consequently, the number of business enterprises actually paying the business tax is negligible. A serious consequence of all these deficits is that the allocation of public investments becomes extremely hindered.For this reason a completely unique plan for reforming the recent local fiscal relationships is presented in this paper. It explicitly argues for the preservation of the German Business tax while nevertheless sustainable stabilising the revenues of German local authorities by means of allowing them a share of the German Value-added tax (German: Umsatzsteuer). This share is distributed to local authorities by their individual share of local revenues of German business tax and total tax revenues of Business taxation.

Keywords: Financial relationships; German fiscal federalism; business taxation; German taxation system; Financial relationships; German fiscal federalism; business taxation; German taxation system (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:227:y:2007:i:4:p:381-402

DOI: 10.1515/jbnst-2007-0404

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