Bureaucracy

Bureaucracy

Every year several thousand pages of laws and decrees are published in the German Law Gazette. These regulations cost not only the public administration but also private business billions of euros.

Simply by meeting their obligation to disseminate information required by federal laws companies incur processing costs of almost 45 bn euros. Such red tape hobbles growth and prevents the creation of new jobs. In many cases, such as occupational health and safety, regulations are essential. Yet a good many of the rules on the statute books are dispensable. Tax bureaucracy, responsible for 45% of all administrative costs, is a particular burden for business. For instance, the provisions governing value-added tax require invoices to be retained for ten years. The European Union has also proven especially creative in thinking up new regulations, often supplemented by more detailed clauses added by the German government. This regulatory frenzy deters investors, who usually have fewer laws to comply with in other countries.

Klaus-Heiner Röhl

Dr. Klaus-Heiner Röhl

Senior Economist for Firms

Tel+49 30 27877-103

Mailroehl@iwkoeln.de

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