High taxes in Germany are perceived as a major obstacle for businesses, according to a recent survey conducted by researchers from Humboldt University, Paderborn University, and Free University Berlin. The study, which focused on small and medium-sized enterprises (SMEs) in Baden-Württemberg and North Rhine-Westphalia, found that a majority of the 657 participants considered the tax burden and administrative workload to be relatively high. Additionally, many respondents believed that the government was not using tax revenues responsibly. The average tax burden for companies was reported to be 36%, which is lower than the tax rate for employees but still considered too high. The participants suggested that a more appropriate tax rate would be 23%.
The study also revealed that the perceived tax burden could influence investment decisions. Many respondents indicated that they would increase their investment activities if the tax burden were lower. Tax reductions were ranked second among the most important measures for promoting investment in Germany, after special depreciation but ahead of investment deduction. The researchers noted that investments are particularly important during times of crisis, such as the current COVID-19 pandemic, as they can help improve the economic situation.
In addition to the tax burden, the survey participants also considered the administrative workload to be too high. They estimated that around one-third of bureaucratic tasks were related to tax administration, with documentation and proof requirements being the main contributors. The complexity of the tax system was also a concern, with 90% of respondents considering it to be too high. Furthermore, many companies reported a lack of information from tax authorities and a general mistrust of how tax revenues are used. The researchers hope that their findings will help bridge the gap between practice and policy, identify causes of dissatisfaction, and suggest potential solutions to improve the tax system and restore trust in the government.
Overall, the study highlights the importance of a fair and transparent tax system for promoting business growth and investment. The results suggest that reducing the tax burden and simplifying administrative procedures could encourage more companies to invest and expand, ultimately benefiting the economy as a whole.
