Tax concessions amounting to billions are not effective and could be abolished. This is the conclusion of a study by FiFo Köln, ZEW Mannheim, ifo Institute and Fraunhofer FIT. The four research institutes evaluated a total of 33 state tax breaks for the Federal Ministry of Finance amounting to 7.4 billion euros.
"The majority of the tax concessions examined are only mediocre. After all, ten measures totalling 1.8 billion euros per year are so weak that they should be urgently adapted or immediately abolished," says Michael Thöne, head of the FiFo Institute for Public Economics at the University of Cologne, which headed the evaluation.
These mainly include reductions and exemptions from energy and electricity taxes. "But light and shadow are close together. Especially with these levies, we also have great privileges, which are still indispensable," adds Thöne.
The studies on the effectiveness, relevance, sustainability and transparency of the 33 very different tax relief rules in income and vehicle tax as well as in energy and electricity tax show how decisive regular evaluations are for a policy that wants to work more and more evidence-based and result-oriented.
"For a climate policy that can be financed sustainably, in future, attention should be paid to a more targeted, i.e. narrower, definition of the benefits granted," says ZEW economist Daniela Steinbrenner.
"Unfortunately, the objectives and effects of the individual instruments are rarely in line with each other in the area of income tax relief for the commercial sector," says Florian Neumeier of the ifo Institute. "Most of the benefits granted miss their purpose or even lead to deadweight effects."
The Fraunhofer Institute for Applied Information Technology (Fraunhofer FIT) has taken over the quantification of revenue losses for public budgets for all tax concessions. "The tax losses examined for the individual measures range from just under one million to well over one billion euros a year," explains Sven Stöwhase, head of the FIT's quantification team: "From very small to very large - with sometimes very different numbers of people and companies directly affected by the benefit: A solid quantification is the central yardstick for political assessment. It allows all citizens to determine for themselves whether the results are worth the taxpayers' money spent."
The examples given are only an excerpt. The various objectives of the benefits evaluated are primarily in the areas of climate protection, international competitiveness, housing construction, cultural and monument protection, asset sharing and employee capital participation, promotion of public transport, agriculture and shipping.
The research results offer - despite the more than 1,000 pages - rapid access to a rich pool of findings and instrumental suggestions in many policy areas via a uniform scoring system and short subsidy identification sheets. The results of the evaluations are compiled in a joint volume of results. There and in the five sub-reports A to E, the evaluation of each of the 33 tax concessions is also presented on a uniform, two- to three-page subsidy identification sheet.
• An overview of the results is available on the FiFo website