German Tax Reform Boosts Long-Term Debt Sustainability and Economic Growth.
The German government made tax reforms in 2005 to address aging population pressures. The reforms included a VAT increase but also tax reductions to stimulate growth. The changes are expected to improve long-term debt but more adjustments are needed for fiscal sustainability. Options like spending cuts, entitlement reform, and broadening the tax base are suggested. The impact on other countries from these policies is predicted to be small.