A recent analysis by the Ifo Institute has sharply criticized the election programs of various parties ahead of the German federal election. While some parties promise tax reliefs, they provide few proposals for financing these measures, the institute stated on Thursday.
Researchers warn that some of the proposed reforms could lead to significant deficits in the state budget. “Our analysis shows that many reform proposals have large financing gaps” said study author Maximilian Blömer. “A sustainable concept requires a clear financing plan to ensure long-term economic stability.”
The data analysis reveals significant differences between the election programs. Some parties, for instance, promise comprehensive tax cuts. The CDU/CSU has proposed a comprehensive reform program, which would result in an annual state revenue loss of 97 billion euros. The FDP’s proposals, in contrast, would cost 142 billion euros. While the tax cuts could strengthen work incentives, the institute argues that this would not be enough to offset the negative effects on the state budget, with an estimated self-financing ratio of around 10 percent. The SPD and the Greens, on the other hand, have presented “fiscally more balanced demands in the tax and transfer system” according to the Ifo Institute.
The AfD and the BSW, in contrast, have presented election programs that “outdo the above-mentioned tax giveaways” the institute stated, with the sustainability of these promises remaining unclear, making tax increases or increased debt necessary. The Left, meanwhile, has proposed plans for the tax and transfer system that would set strong negative work incentives.