GERMANY: Use idle surplus to pay for refugees, says Ifo

The Ifo Institute in Munich has suggested that the German government should use unexpected budget surpluses to fund the cost of settling and rehabilitation of refugees, mainly from the Middle East and North Africa, who seek better prospects in low-unemployment economies like Germany.

“Unexpectedly high tax revenues mean that the budget can still be balanced in the short term, despite rising expenditure on refugees,” noted Niklas Potrafke, Ifo’s budget expert.
“But the budget has to be balanced in the long term too. This means that the government needs to tighten its belt in terms of other expenditure,” added the Director of the Ifo Center for Public Finance and Political Economy.
“If further spending is required in the long term it should not be funded by higher taxes but by spending cut-backs. If, for example, the government was to abolish retirement at 63, the tax subsidies for pension funds could be reduced.”