European Economy. Economic Papers. Germany's growth performance in the 1990's

Table 2.2: Cyclically adjusted primary balance (in % of GDP)
D
F
I
UK
EUR
(1)
EU
(2)
1991
-2.0
-0.2
-0.5
0.6
0.2
0.4
1995
-0.1
-1.4
4.0
-1.9
1.4
0.7
2000
1.7
1.6
4.6
4.0
3.3
3.7
2001
0.7
1.5
4.9
3.0
3.4
3.6
(1)
Euro-area excluding Germany, Greece, Ireland, Portugal and Spain
(2)
EU excluding Germany, Greece, Ireland, Portugal, Spain and Sweden
Source : Commission services
2.2.2 Composition of revenues
On the revenue side, there has been a clear increase in all components since 1991, as shown in
Table 2.3.
 
The ratio of indirect taxes to GDP went up from 11.1% in 1991 to reach a peak of
12.2% in 1999 (owed mostly but not exclusively to the introduction of the ‘ecological tax’). The
rise in direct taxes was as important as that of indirect taxes, due not only to the introduction of
the solidarity tax, but also to the absence of a major income tax reform, which lead to a
significant bracket creeping effect. The financial impact of re-unification, weak economic
18
While difficult to calculate, the annual net transfers from West Germany to East Germany are estimated at
around 4% of GDP per year in the 1990s.

---

growth and a rise in the number of pensioners was clearly strongest on social security
contributions, which saw their share in GDP rise from 17.2% in 1991 to a peak of 19.7% in
1997. At the same time social security contributions rates increased from 35.5% in 1990 to 42%
by 1997, falling back gently since then to around 41% by 2001 (see Table 2.4).
Table 2.3: Development of General Government Revenues (in % of GDP)