If the tax increase?
The growing national debt must be tackled with an increase in revenue
The rescue operations undertaken by the State at present, to the economy from a deep to preserve recession and many companies from possible bankruptcy, will lead to a rapidly growing national debt. Forward-looking observers make is therefore thought to how the resulting deficit can be compensated in the government again. On the expenditure side, the margins are not only due to the lack of popularity of limited funding cuts but also because many expenses are based on a legal basis and contractual arrangements that can not be disregarded without further notice or been terminated. So are attempts must be made to the revenue side of the balance.
In plain language this means that taxes must be increased be.
The taxes on income and profits it is because of the negative incentive effect, however, very reluctant to talk at all of the necessary tax cuts. This could lead to a stimulation of consumption and investment to growth and thus higher tax revenues to finance so themselves. Experts, however, certainly not in the assessment of impact chains, whether that actually works - not to mention the unpredictable time delay before taking effect occurs. So the only value added tax. It is a tax on consumption, so the negative effect on investment and thus for economic growth initially low. Can However, the companies due to a sluggish consumer spending, the increase in VAT is not - as should have been tax-technical - to pass on to consumers, the profits are also affected, and thus suffers from the investment capacity of companies, which in turn would dampen the growth of national product. It also comes
to anticipatory: consumers behave rationally when major purchases such as cars or home ownership now active and not wait until after the tax increase. Economically, this pre-buying are missing but the consumption of the next period.
The economic Joker VAT
that a value added tax increase is politically relatively easy to enforce, has shown a drastic increase in the last 16 to 19 per cent for the standard rate, which ran through the federal government after the elections in autumn 2005. The negative impact of this action on the straight back a little more robust expectant economy was indeed noted by many experts, the increase came but overall little resistance, because - unlike the income tax - a tax increase is less obvious in the pockets of voters reflected.
The resulting higher prices are charged to the dealers rather than politics. What could be more than to finance the resulting deficit again to use the VAT? has to be - is spoken by 6% to 25% then - but should be a noticeable effect can be achieved, would have been a drastic increase. The apparently simple solution to the national debt, however, like any medicine other side effects: it must be an increase in illegal work is concerned, in addition, it is also ultimately a loss of consumption to a if are also slowly becoming effective reduction of growth - as the experience the last economic cycle have shown.
Differentiated increase
experts therefore propose instead a marked increase in the standard rate the abolition of the split value added tax rate before. The reduced VAT rate of 7% on some goods was originally founded social: goods and services for everyday use should be less burdened. It appeared, however, over time, that a general betterment of such foods, books, and some services also, and especially middle and higher income groups benefit, their consumption is subsidized. If we operate the reduction of subsidies as a means against unjust taxation and growing national debt seriously, the introduction of a uniform VAT rate would be certainly a reasonable measure. It will avoid that the general duty actually have to climb to astronomical heights. One seems to be clear, at the latest after the election is a however configured sales tax increase be inevitable.
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