However, this cannot be envisaged until budget consolidation has been achieved or until there is willingness to finance lower tax rates by a further spending restraint or a broadening of the tax base. We at the Bundesbank proposed specific measures in this respect, such as the abolition of all reduced rates of turnover tax.
In the social security system far-reaching reforms need to be implemented in order to reduce non-wage labour costs. Social insurance contributions, which are a key element of such costs, are not only very high by international standards, but are rising substantially both currently and over the long term.