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Despite increase in VAT rate to 19% in 2007, decline in revenue shortfall to 9% and an expected 9% for 2008

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  • Rüdiger Parsche

Abstract

In 2005 for the first time in years a decline in the revenue shortfall ratio of VAT was registered. This decline in revenue shortfall also occurred in 2006 and, according to available data, also in 2007. On the basis of the available key economic data, a VAT revenue shortfall ratio of 9% was calculated, which was lower than the 11½ percent ratio in 2005 and the 9½ percent ratio in 2006. The decline in the shortfall ratio in 2007 is of particular interest, since this was the year that Germany increased its VAT rate by 3 percentage points to 19%. With this strong increase, many expected an increase in undeclared and untaxed work, and thus an increase in the revenue shortfall ratio. For 2008, a shortfall ratio of 9% is again expected.

Suggested Citation

  • Rüdiger Parsche, 2008. "Despite increase in VAT rate to 19% in 2007, decline in revenue shortfall to 9% and an expected 9% for 2008," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 61(12), pages 55-56, June.
    • Handle: RePEc:ces:ifosdt:v:61:y:2008:i:12:p:55-56
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    File URL: https://www.ifo.de/DocDL/ifosd_2008_12_4.pdf
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    References listed on IDEAS

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    1. Andrea Gebauer & Rüdiger Parsche, 2005. "Confirmation of the slight drop in the rate of VAT revenue losses for 2005," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 58(21), pages 13-14, November.
    2. Chang Woon Nam & Rüdiger Parsche, 2006. "Slight drop in VAT shortfalls also expected in 2006," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 59(15), pages 22-23, August.
    3. Chang Woon Nam & Rüdiger Parsche, 2007. "In spite of the 19 percent VAT rate, a further drop in revenue shortfall is expected," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 60(10), pages 41-42, May.
    4. Andrea Gebauer & Rüdiger Parsche, 2005. "Slight decline in VAT evasion in 2005," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 58(09), pages 12-13, May.
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    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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