ABSTRACT
This chapter explains the new constitutional debt brakes that is, the rules necessary to implement fiscal sustainability in ageing societies like Germany unintentionally may prompt a process that leads the country away from its unique federalism model based on ubiquitous cooperation and limited regional autonomy. It argues that a good and sustainable match of the allocation of functions in German federalism and the fitting fiscal equalization may not be easily attained anymore when debt brakes are fully in force. In this case, tax autonomy triggered by the debt brake could in turn trigger a move to overcome the deadlock of federalism reform described above. It shows that the old German balance between little Lnder autonomy on the expenditure side of their budgets and almost no autonomy on the revenue side has been destroyed by the introduction of the debt brake. Arguing along this line, it elucidates that federalism with a debt brake might mean federalism with more tax autonomy.
