ifo Media Center
The ifo Institute invites you to participate in the discussion of interesting economic topics via the Internet. In our ifo Media Center a whole series of remarkable events are available and can be viewed in full length. We also record selected speeches and presentations given by employees or at events and make them available in our Media Center.
Ifo Viewpoint No. 177: Income tax relief can be financed
Taxation policy could be a major campaign issue in Germany in the coming year. The CDU SME Business Union has recently called for a lowering of the income tax in Germany. Tax cuts have not played a major role in the economic and fiscal policy debates of recent years, for various reasons. Firstly, after anchoring the “debt brake” in the German constitution, the reduction in public deficits has been the focus of attention. Secondly, in recent years the debt crisis in the euro area has kept politicians on tenterhooks.
Ifo Viewpoint No. 176: Italian Banks Should Not Be Allowed to Sidestep Investor Bail-In!
Should Italian banks crippled by non-performing loans be bailed out at the taxpayers’ expense? For a long time this kind of bank bail-out was common practice. Germany is no exception to this rule. One of the lessons of the financial crisis was that bank losses must no longer be passed onto taxpayers. That is why the European banking union rules strictly limit state funding for ailing banks. It is only allowed after private investors have sustained losses amounting to at least eight percent of the balance sheet total. Exceptions are possible in a crisis, for instance, that poses a threat to the banking system of the Eurozone as a whole. This is not, however, the case with the Italian banking system.
Ifo Viewpoint No. 175: How to deal with Brexit
The vote for Brexit was a resounding slap in the face to the so-called political and economic elites in London, Brussels and across Europe from British voters. It is not easy to react in an appropriate manner in such cases. Like other fits of anger, the Brexit was caused by a mixture of irrationality and rage over real problems. It was irrational because exiting the EU will significantly damage Britain’s economy. Although many Brexit voters live outside the affluent centres that benefit most from the EU internal market, they are nevertheless harming themselves with this vote. Falling tax revenues will inevitably lead to cutbacks in nationwide public services like schools and healthcare via the NHS, as well as slower pension increases. This irrationality was fuelled by a Leave campaign that deceived many voters by spreading absurdly false information about the EU in some cases, wildly exaggerating costs of immigration and making unrealistic promises. This was only possible thanks to the poor organisation of the Remain campaign, which featured spectacular failures not only on the part of David Cameron, but also by Labour Party leader Jeremy Corbyn, who refused to make a determined stand for the EU, because it isn’t socialist enough for his liking.
Ifo Viewpoint No. 174: Refugees Will Not Lighten Germany’s Load but Deserve Its Support
Around one and a half million people immigrated to Germany in 2015, including many from Syria, who were fleeing from the civil war in their home country. Far fewer immigrants are expected to arrive in 2016, as other European countries have closed their borders and the Balkan route has also been blocked. In the face of this wave of immigrants, Germany’s population showed an amazing willingness to help people fleeing war and political repression. That was impressive. But what are the economic implications of the immigration wave?
Ifo Viewpoint No. 173: Brexit and its Economic Implications
Forecasts are notoriously difficult to make. I am nevertheless sure that Britain’s exit from the EU, the so-called Brexit, would be a bad deal both for the Brits and for the rest of the European Union.
Ifo Viewpoint No. 172: Preparing for Crises – a “Legacy” for States
A proposal put forward by the German Federal Ministry of Finance has given a boost to the negotiations between Greece, the EU Commission and the IMF. These parties could not agree on the volume of the fiscal consolidation package needed to enable Greece to meet the budget goals set by the Troika. It is not only difficult to calculate the costs of the refugee crisis. The future revenue and spending of the crisis-afflicted country are difficult to predict in any case. This led to a proposal from Berlin to approve consolidation measures in advance, which would only take effect if Greek government spending were to exceed forecasts.
Ifo Viewpoint No. 171: Accountability Bonds
Progress has been made in overcoming the economic crisis in the euro area, even though further adjustments are needed. Efforts to restructure public finances, however, are flagging and meeting with increasing political resistance. There are serious shortfalls in the governance and coordination of fiscal policy. The European Fiscal Compact stipulates that member states reduce their budget deficits towards the upper ceiling of a structural deficit (corrected for cyclical effects) of 0.5 percent of GDP. In reality, however, the structural deficits in many countries are rising. Yet no serious efforts are being made on the part of the European Commission and Council to enforce the debt rules. Implicit joint liability through the ESM and the ECB bond purchasing programmes undermines incentives for sound fiscal policies.
