Dr. Florian Neumeier

The OECD’s proposals for reforming international corporate taxation will bring Germany additional tax revenue of EUR 2.4–3.4 billion per year. This is the result of the ifo Institute’s calculations on behalf of the German Federal Ministry of Finance. “According to our estimates, Germany would be a beneficiary of the reform. But the increase in additional tax revenue would be rather moderate,” says Florian Neumeier, Head of the ifo Research Group Taxation and Fiscal Policy.

Economic sanctions induce considerable economic damage in the target countries. Sanctions by the United Nations cause growth in sanctioned countries to decline by 2 percentage points annually. Extrapolated over ten years, this is equivalent to a 25 percent drop in per capita economic output. Unilateral sanctions by the US lead to an annual decline in growth of almost 1 percentage point in the countries affected. In the long term, this corresponds to a 13 percent slump in the economy’s output per capita.

The fuel discount for diesel and gasoline in Germany has essentially been passed on to customers, according to calculations by the ifo Institute. “In the case of diesel, filling stations passed on 100 percent of the discount, so the full 17-cent tax cut per liter. For premium gasoline, it was 29 to 30 cents of the 35-cent tax cut, or 85 percent,” says Florian Neumeier of the ifo Institute, who prepared the calculations together with Daniel Stöhlker and ifo President Clemens Fuest. 

Around 66 percent of German households are in favor of raising the top tax rate to finance climate action. This is the finding of an ifo study based on a survey in which German households were asked about their preferences with regard to financing climate change policies.

In Berlin, rents and purchase prices for properties affected by the city’s rent cap have developed more weakly than in other major German cities. Berlin introduced its cap exactly one year ago. At the same time, the supply of rental properties in the regulated segment declined. This is the finding of a new ifo Institute study comparing Berlin with other major cities with more than 500,000 inhabitants. “Purchase price growth rates in Berlin have been 5 to 9 percentage points below the control group since the third quarter of 2020,” says ifo President Clemens Fuest, one of the coauthors. By contrast, rents and purchase prices for uncapped properties in Berlin have recently been rising faster than in the control group.

German supermarkets have passed on almost all of the reduction in VAT as of July 1 to their customers. Prices fell by an average of 2 percent, finds an ifo Institute study covering 60,000 products in the online store of retail chain Rewe. For product groups where competition is stronger, the reduction in VAT caused greater price reductions than for product groups where competition is weaker, write the authors Clemens Fuest, Florian Neumeier, and Daniel Stöhlker in an essay for ifo Schnelldienst digital 13/2020.

The coronavirus crisis is increasingly dominating people’s lives. In October, 86 percent of people in Germany reported they were preoccupied by Covid-19 and its consequences frequently or almost always. During the first wave in June, this figure was just 73 percent. This is one of the findings of an interdisciplinary study on behalf of the German Federal Ministry of Health and involving the ifo Institute and the forsa opinion research institute, among others.

The growth incentive in the German government’s stimulus package is expected to be limited. In 2020, the package is expected to increase the country’s economic output (GDP) by EUR 30 billion. The measures required to create this effect will cost EUR 88 billion. “Nonetheless, it is sensible for fiscal policy to support the economy in this critical situation,” writes ifo President Clemens Fuest in an article published in ifo Schnelldienst.gibt.

In Berlin, the rent for almost all apartments advertised on real estate portal immowelt.de (96.7 percent) is above the rent cap. In 83.5 percent of cases, the rent exceeds the cap by over 20 percent. This is the result of an analysis conducted by the ifo Institute and Immowelt. When the law comes into force, rents 20 percent above or higher must be reduced – even if the rental agreement was signed before the cut-off date in June 2019.

FiFo Köln, ZEW Mannheim, ifo Institut und Fraunhofer FIT bewerten für das Bundesfinanzministerium 33 deutsche Steuervergünstigungen - Nur sechs Maßnahmen mit zusammen 2,7 Milliarden Euro bekommen ein „Gut“

Although real estate transfer taxes are paid by the buyers of a property, it is above all the sellers who effectively bear the burden. This is the result of a new study by researchers at the ifo Institute published on Monday.

Clemens Fuest, Florian Neumeier und Daniel Stöhlker