Slight drop in VAT shortfalls also expected in 2006

The VAT revenue shortfalls quantified by the Ifo Institute increased suddenly in 2001 and remained at a high level in the following years. At the beginning of 2005, a drop in the VAT shortfall rate was determined on the basis of estimated aggregate economic figures. This decline in the shortfall rate for 2005 that was detected in spring 2005 has been confirmed by now available data. This could indicate that legislative measures are having an effect and are helping to stabilise VAT revenue. This is confirmed by calculations by the Ifo Institute in which the percentage of VAT shortfalls this year will amount to 10½ percent, falling below the 11 percent level of 2005.