ifo Institute: German Economists Favor Reduction in Corporate Taxation
Germany should reduce its tax rates for companies. This is the opinion of the majority of economists surveyed for the ifo and Frankfurter Allgemeine Zeitung Economists Panel. Of the 104 economists surveyed, 53 percent agreed with the statement that Germany should follow the example of other countries and reduce corporate taxes. Just under a quarter of the respondents disagreed.
A slight majority of economists are in favor of reducing corporate income tax by one-third to 10 percent. This would bring the total tax burden down to 25 percent, putting Germany on a par with comparable countries. Many economists estimate the decline in tax revenue for this scenario at EUR 10 billion; some consider it would be less. Individual respondents put the potential loss at EUR 13 or 14 billion.
As to the proposal for a minimum tax, opinion is not very clear. Only just over one-third of economists believe that the proposal being discussed at the global level is a suitable way to limit tax competition. One-fifth disagree.
What is clear, though, is how the survey participants assess country-by-country reporting, which obliges multinational companies to submit country-specific reports with the relevant key figures to the tax authorities: 60 percent consider this to be a useful instrument for combating tax avoidance. While companies and associations oppose publication out of concern for their business secrets, the European Parliament is calling for this data to be published – and 66 percent of economists side with the parliament. Only 15 percent of those surveyed reject this call.
“I was surprised to see such strong support for mandatory publication of country-by-country reporting in the EU, even though this would be a breach of tax secrecy,” says Thiess Büttner from the University of Erlangen-Nuremberg, who designed the survey. “Apparently, the rules on taxation are so complex that the expectation is for there to be a large discrepancy between the actual and statutory tax burden.”
Clemens Fuest, President of the ifo Institute, takes a critical view of country-by-country reporting: “The data is a useful source of information for tax administrations and should be made available in anonymized form for scientific analysis. But I consider the publication of individual EU companies’ data to be counterproductive. This only benefits non-European competitors and creates incentives to locate outside the EU, especially for holding companies.”
