Umsatzsteuerreform: eine Frage der politischen Zielsetzung
In Germany, the Value-Added Tax (VAT) system is very complicated. In addition to the general VAT rate of 19 percent, a reduced rate of 7 percent is levied on numerous items such as food, books and magazines, flowers, and local public transport. Furthermore, some goods and services (such as bank and health services or community work) are exempted from the VAT. The complexity of taxation rules and exemptions triggered many discussions on the need and potential of a VAT reform, but to date, all attempts to simplify the system have failed. However, this study shows, assuming tax neutrality the introduction of a single tax rate may increase efficiency as well as reduce administrative effort markedly. Indeed the average tax burden of those who earn less would increase as well, but only to a moderate extent.
Breidenbach, P. and T. Kasten (2014), Umsatzsteuerreform: eine Frage der politischen Zielsetzung. RWI Konjunkturberichte, 65, 2, 23-33