Confirmation of the slight drop in the rate of VAT revenue losses for 2005

The Ifo Institute has intensely studied revenue from turnover taxes for some time. For many years this was not a problem area. In 2001, however, startling revenue losses from turnover tax were reported, and in the following years revenue remained more or less decoupled from economic developments. As a result the rate of VAT revenue shortfall calculated by the Ifo Institute rose sharply in 2001 and has remained at a high level in the following years. At the beginning of 2005, for the first time, estimates of key economic figures pointed to some decline in this rate for the current year. This drop, which was apparent in the spring, seems to be continuing in the last quarter of 2005, based on available statistical data and the necessary residual estimates.