Proposals to increase environmentally related taxes are often challenged on competitiveness grounds. The concern is that value creation in certain sectors might decline domestically if a country introduces environmentally related taxes unilaterally. This paper provides evidence on the short-term competitiveness impacts of the German electricity tax introduced unilaterally in 1999.
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Germany has the 3rd highest tax wedge among the 34 OECD member countries. The average single worker in Germany faced a tax wedge of 49.3% in 2014 compared with the OECD average of 36.0%.
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The tax burden in Germany increased by 0.2 percentage points from 36.5% to 36.7% in 2013. The corresponding figure for the OECD average was an increase of 0.4 percentage points from 33.7% to 34.1%. The German standard VAT rate is 19%, which is very close to the OECD average. The average VAT/GST standard rate in the OECD was 19.1% on 1 January 2014.
"We have to transition to more transparent, multilateral mechanisms. Thanks to your hard work, taxation is finally catching up with globalisation, making it more redistributive, harnessing its potential for social progress and justice, making people’s lives better. People sometimes forget that this is what taxation, indeed what economics is all about.", said the OECD Secretary-General at the Global Forum.
Bilateral Agreements that have been signed to establish exchange of information for tax purposes.
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Agreement between Germany and Saint Lucia for the exchange of information relating to tax matters
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Agreement between Germany and Turks and Caicos Islands for the exchange of information relating to tax matters
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Agreement between Germany and the Cayman Islands for the exchange of information relating to tax matters
Further fiscal easing in late 2008 and early 2009 contributed to a markedly widening fiscal deficit in 2010. A newly enacted fiscal rule will help bring public finances back to a sustainable path, as discussed in this working paper.
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Agreement between Germany and Bahamas for the exchange of information relating to tax matters