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Tax reform: Despite upswing no scope for income tax cuts?

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  • Philipp Rösler
  • Rolf Peffekoven

Abstract

In the coalition agreement of November 2009, tax cuts were promised. The government revenue forecast of May 2011 spoke of markedly increased tax revenues up to 2015. Given this budget situation, is there really no scope for tax cuts? In light of the progress achieved in fiscal consolidation, Philipp Rösler, Federal Minister for Economics and Technology, sees chances for implementing of cutting taxes for the low and middle incomes as of 1 January 2013. This is not only fiscally responsible but also necessary to promote growth. Rolf Peffekoven, University of Mainz, points out that tax cuts must not stand in contradiction to budget consolidation. Consolidation is achieved by both tax revenues and by reductions in expenditures. In this regard, there is no fundamental conflict between tax cuts and consolidation.

Suggested Citation

  • Philipp Rösler & Rolf Peffekoven, 2011. "Tax reform: Despite upswing no scope for income tax cuts?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(15), pages 3-8, August.
    • Handle: RePEc:ces:ifosdt:v:64:y:2011:i:15:p:3-8
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    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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