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How should the early implementation of the third phase of the tax reform be financed?

Author

Listed:
  • Wolfgang Wiegard
  • Winfried Fuest

Abstract

The earlier implementation of the third phase of the tax reform in 2004 will mean tax revenue shortfalls of €15.6 billion for the federal government, the Länder and the municipalities. If this amount is financed by government borrowing, Prof. Wolfgang Wiegard, Regensburg University, argues that a choice must be made between "a slight boost for the economy as a result of tax reform implementation by taking on new debt and a possible loss of confidence in fiscal policy". In his opinion, the negative outweigh the positive effects. Also Prof. Winfried Fuest, Institute of the German Economy, Cologne, argues for other financing alternatives.

Suggested Citation

  • Wolfgang Wiegard & Winfried Fuest, 2003. "How should the early implementation of the third phase of the tax reform be financed?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 56(14), pages 3-7, July.
    • Handle: RePEc:ces:ifosdt:v:56:y:2003:i:14:p:3-7
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    Cited by:

    1. Anita Dehne, 2004. "Major tax reform: Necessary and feasible," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(11), pages 11-23, June.

    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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