Reducing bureaucracy provides scope for greater economic efficiency

Bureaucracy costs time and money. The systematic reduction of unnecessary formalities is therefore one of the Federal Government's key reform projects.

The consistent reduction of bureaucracy creates scope for improved economic performance. According to the Federal Government's latest assessment report, 330 regulations have been simplified, thus saving industry more than seven billion euros per year. Furthermore, application procedures have also been simplified in the private sector.

Reducing obstacles to innovation remains a great challenge, particularly obstacles connected with innovative company start-ups and funding innovations. The bottleneck in the provision of equity and venture capital will play an important role here.

The possible effects of tax concessions on mobilizing research and development expenditure and on SMEs and new company start-ups will have to be discussed in more detail. A Federal Government working group has just studied the possibility of introducing tax concessions for research and development (R&D). The result: Tax concessions to support R&D would be feasible and would have positive effects. This instrument is already applied in 21 OECD states as well as in China and India and is being extended considerably in some cases. The advantages of fiscal incentives for R&D lie in their wide-scale effect. However, they also involve considerable additional funds.