Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Demographic change depresses tax revenues

04.11.2016

Population aging and ultimately population shrinking in Germany will depress tax revenues in the medium and long term, as a recent analysis by Fraunhofer FIT and Prognos shows.

In the next decades, population aging in Germany will accelerate and also induce a decline of the total population. These demographic changes can be expected to have a profound impact on the governmental budget.


By 2060, income tax revenues will be between 12 and 21 percent lower than in a scenario without demographic change, whereas sales tax revenues will be between 13 and 25 percent lower.

© Fraunhofer FIT


Sales Tax Revenues.

© Fraunhofer FIT

While changes in public expenditures have been forecasted regularly since 2005, the revenue side has received less attention to date. A new study by the Fraunhofer Institute for Applied Information Technology FIT and the Prognos AG sheds light on the impact of demographic change on the future development of tax revenues.

The study focuses on the development of income tax revenues given a shrinking working population, but also considers sales tax revenues, which account for a similarly large share of total tax revenues.

Fraunhofer FIT quantifies income tax revenues in the years 2030, 2045 and 2060 using simulation models based on microeconomic data. Starting from a scenario without any demographic changes, the study distinguishes three possible paths for the development of the population in Germany. These correspond to the variants 2 (continuity), 3 (relatively old population) and 6 (relatively young population) of the official forecast of the Federal Statistical Office.

In all scenarios, the expected demographic changes are found to have a clear negative impact on both income and sales tax revenues. This holds especially true for the more distant future, when the population in Germany will not only be markedly older but also smaller than today. By 2060, income tax revenues will be between 12 and 21 percent lower than in a scenario without demographic change, whereas sales tax revenues will be between 13 and 25 percent lower.

Population aging increases the impact of various deductibility rules on total income tax revenues, in particular the impact of the deductibility of old-age and health insurance provisions. The tax code actually enhances the generosity of old-age provision deductions until 2040, whereas the taxable share of old-age pensions increases.

The income tax balance of this "deferred taxation" is negative and the problem is aggravated by demographic change. Due to expected increases in real incomes, however, demographic change does not imply an absolute drop in income and sales tax revenues in the next decades.

Link to the study (in German): http://publica.fraunhofer.de/eprints/urn_nbn_de_0011-n-4176903.pdf

Link to the summary of the study (in German): http://publica.fraunhofer.de/eprints/urn_nbn_de_0011-n-4176678.pdf

Alex Deeg | Fraunhofer-Institut für Angewandte Informationstechnik FIT

More articles from Business and Finance:

nachricht Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik

nachricht RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: BAM@Hannover Messe: innovative 3D printing method for space flight

At the Hannover Messe 2018, the Bundesanstalt für Materialforschung und-prüfung (BAM) will show how, in the future, astronauts could produce their own tools or spare parts in zero gravity using 3D printing. This will reduce, weight and transport costs for space missions. Visitors can experience the innovative additive manufacturing process live at the fair.

Powder-based additive manufacturing in zero gravity is the name of the project in which a component is produced by applying metallic powder layers and then...

Im Focus: Molecules Brilliantly Illuminated

Physicists at the Laboratory for Attosecond Physics, which is jointly run by Ludwig-Maximilians-Universität and the Max Planck Institute of Quantum Optics, have developed a high-power laser system that generates ultrashort pulses of light covering a large share of the mid-infrared spectrum. The researchers envisage a wide range of applications for the technology – in the early diagnosis of cancer, for instance.

Molecules are the building blocks of life. Like all other organisms, we are made of them. They control our biorhythm, and they can also reflect our state of...

Im Focus: Spider silk key to new bone-fixing composite

University of Connecticut researchers have created a biodegradable composite made of silk fibers that can be used to repair broken load-bearing bones without the complications sometimes presented by other materials.

Repairing major load-bearing bones such as those in the leg can be a long and uncomfortable process.

Im Focus: Writing and deleting magnets with lasers

Study published in the journal ACS Applied Materials & Interfaces is the outcome of an international effort that included teams from Dresden and Berlin in Germany, and the US.

Scientists at the Helmholtz-Zentrum Dresden-Rossendorf (HZDR) together with colleagues from the Helmholtz-Zentrum Berlin (HZB) and the University of Virginia...

Im Focus: Gamma-ray flashes from plasma filaments

Novel highly efficient and brilliant gamma-ray source: Based on model calculations, physicists of the Max PIanck Institute for Nuclear Physics in Heidelberg propose a novel method for an efficient high-brilliance gamma-ray source. A giant collimated gamma-ray pulse is generated from the interaction of a dense ultra-relativistic electron beam with a thin solid conductor. Energetic gamma-rays are copiously produced as the electron beam splits into filaments while propagating across the conductor. The resulting gamma-ray energy and flux enable novel experiments in nuclear and fundamental physics.

The typical wavelength of light interacting with an object of the microcosm scales with the size of this object. For atoms, this ranges from visible light to...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

Invitation to the upcoming "Current Topics in Bioinformatics: Big Data in Genomics and Medicine"

13.04.2018 | Event News

Unique scope of UV LED technologies and applications presented in Berlin: ICULTA-2018

12.04.2018 | Event News

IWOLIA: A conference bringing together German Industrie 4.0 and French Industrie du Futur

09.04.2018 | Event News

 
Latest News

Quantum Technology for Advanced Imaging – QUILT

24.04.2018 | Information Technology

AWI researchers measure a record concentration of microplastic in arctic sea ice

24.04.2018 | Earth Sciences

Complete skin regeneration system of fish unraveled

24.04.2018 | Life Sciences

VideoLinks
Science & Research
Overview of more VideoLinks >>>