| Research Abstract |
Traditionally and by constitutions, Germany has been a federal state in state fabric as well as in fiscal and tax system. This character didn't change after her unification in 1990, because East Germany, a socialist unitary state, was annexed to West Germany, a social federal state, and not the reverse.
I thought this kind of unification has three aspects. Firstly I investigated how fiscal and tax system were prescribed under the West German constitution. Now that these prescriptions hold true in all area of unified Germany, this means general aspect of the unification.
But, secondly, German unification has also a specific aspect, because new born five states in old East Germany area are weak in fiscal abilities. So I examined the meaning of exceptions which unification treaty has acknowledged. Under these exceptions the horizontal fiscal adjustment system is included, which is famous for being characteristics in German type of federal state.
Thirdly I explained how the fiscal and tax policy after 1990 has developed corresponding to changing situations. But according to my view, the stabilization problems of local finance and tax system is important as well, because resource allocation, for example the provision of social overhead capital, is mostly accomplished by the hands of local governments. So my study refers much to local fiscal and tax system. In Germany the business tax has played main role historically. At the same time this tax has been under strong criticism, because German firms are imposed under this tax according not to the size of income (gain), but to external standard of assessment.
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