Reforming the tax system
The labour tax wedge in Germany is higher than in many OECD economies.
Public health and long-term care spending is mostly funded from social security
contributions on wage income, and this spending will rise as the population ages and as a
result of technological progress in health care. As argued in previous Economic Surveys
(e.g. OECD, 2014a) the tax burden could be shifted towards real estate and consumption, for
example by updating valuation of real estate and by eliminating exemptions and lower tax
rates in the VAT system.
EU Forecast
euf:ba18a:56/nws-01