Jörg Alt SJ Germany VIII: Revenue, Costs, Losses and Results Compiled and ordered notes from interviews including cross-checks with publicly accessible material, prepared for future use. Language check and German quotes translated into English thanks to Dr. Sue Berning. alt 15.10.2016 Table of Content Table of Content ............................................................................................................. 2 List of Graphics .............................................................................................................. 5 List of Tables .................................................................................................................. 5 1 German Governmental Finance ............................................................................... 5 1.1 The 4 Pillars of German governmental finance ................................................ 5 1.2 Tax and Social Security Contributions revenue ............................................... 6 1.2.1 Overall amount and development ............................................................... 6 1.2.2 Assignment of revenue ............................................................................. 10 1.2.3 Development of tax revenue Bavaria ........................................................ 11 1.2.4 Development of tax revenue in Nuremberg .............................................. 14 1.3 Conclusion ...................................................................................................... 14 2 Costs ....................................................................................................................... 15 2.1 Direct costs ..................................................................................................... 15 2.1.1 The Cost of Taxes ..................................................................................... 15 2.1.2 The Cost of Tax Administration ............................................................... 16 2.1.3 Cost of taxation lower due to computerization? ....................................... 17 2.1.4 Cost of Tax Administration – international comparison .......................... 17 2.1.5 The costs of German tax federalism ......................................................... 19 2.1.6 The costs of tax justice .............................................................................. 20 2.1.7 Costs of Tax Collection and EU directives ............................................... 21 2.1.8 Conclusion ................................................................................................ 22 2.2 Direct costs for serving governmental debt .................................................... 22 2.2.1 Interest ...................................................................................................... 22 2.2.2 Repayment ................................................................................................ 24 2.3 Indirect costs ................................................................................................... 24 2.3.1 Decaying infrastructure and public investment ........................................ 24 2.3.2 Deficits in public services ......................................................................... 24 2.4 Future costs ..................................................................................................... 25 2.5 Conclusion ...................................................................................................... 25 3 “Losses for the common good” .............................................................................. 25 3.1 Conceptual links ............................................................................................. 25 3.2 Assessing losses for the common good .......................................................... 26 3.2.1 Official statistics ....................................................................................... 27 3.2.2 Surveys ...................................................................................................... 27 3.2.3 Macro-Economic statistics ........................................................................ 27 3.3 Losses due to tax evasion ............................................................................... 27 2 3.3.1 Germany .................................................................................................... 27 3.3.2 Bavaria ...................................................................................................... 29 3.4 Losses due to Turnover Tax Fraud ................................................................. 29 3.5 Losses due to the informal economy .............................................................. 30 3.5.1 Global ........................................................................................................ 30 3.5.2 Germany .................................................................................................... 32 3.6 Gains and losses due to IFFs .......................................................................... 34 3.6.1 Germany and IFFs .................................................................................... 34 3.6.1.1 Outflows ............................................................................................. 35 3.6.1.2 Inflows ............................................................................................... 36 3.6.1.3 Example “Guesstimate” of money laundering ................................... 39 3.6.1.4 Gains and losses ................................................................................. 40 3.6.1.5 IFFs from Germany and African governance issues ......................... 40 3.6.2 Illicit financial flows by TNCs ................................................................. 41 3.6.2.1 The need to include them ................................................................... 42 3.6.2.2 Gains for Germany ............................................................................. 43 3.6.2.3 Losses for Germany ........................................................................... 43 3.6.2.4 Losses for developed and developing countries ................................ 44 3.6.3 International Developments ...................................................................... 45 3.6.3.1 The most up-to-date and large picture ............................................... 45 3.6.3.2 Africa: net-creditor to the world? ...................................................... 46 3.6.3.3 Sub-Sahara Africa .............................................................................. 47 3.6.3.4 Kenya & Zambia ................................................................................ 48 3.6.3.5 Indirect losses due to IFFs ................................................................. 48 3.7 Immeasurable systemic distortion and corruption .......................................... 48 3.8 Conclusion ...................................................................................................... 49 4 Result ..................................................................................................................... 50 4.1 Preliminary effort of summing up .................................................................. 50 4.2 A multifaceted issue: 2 examples ................................................................... 50 4.3 Simplicity & complexity, in principle & de facto .......................................... 51 4.4 Legal deficits .................................................................................................. 52 4.4.1 “Acting according to established legal norms” ......................................... 52 4.4.2 Transparency ............................................................................................. 52 4.4.3 Banking secrecy, tax secrecy & Co. ......................................................... 53 4.4.4 Burden of proof ......................................................................................... 54 4.4.5 Conclusion ................................................................................................ 54 4.5 Computerization and staff .............................................................................. 55 3 4.5.1 Usefulness and limits of user .................................................................... 55 4.5.2 Legal and practical deficits to improve ..................................................... 55 4.5.3 Principal limits to computerization ........................................................... 55 4.5.4 Importance of intuition ............................................................................. 56 4.5.5 Adequate training and adequate staff to check ......................................... 56 4.5.6 Sovereign activities of state administration .............................................. 57 4.5.7 Conclusion ................................................................................................ 57 4.6 Government debt and government staff ......................................................... 58 4.6.1 Legal norm or political intention? ............................................................ 58 4.6.2 Surplus revenue higher than costs? ........................................................... 59 4.6.3 Surplus revenue, deterrence, tax honesty .................................................. 60 4.6.4 Conclusion ...............................................................................................