The state expects tax revenue to increase by 10 billion by 2025

But only the volume of the federal states and municipalities is increasing. The federal government is losing 2 billion euros.

The coffers of the federal states and municipalities will fill up more than expected in the next few years.

Dhe tax revenue will increase by 10 billion euros up to and including 2025 compared to last November’s forecast. This is what the responsible working group predicts after three days of deliberations. While the states across the board and the municipalities at least achieved a plus on average over the years, the federal government has to be prepared for further losses totaling 2 billion euros. The additional income that is forecast for him in 2024 and 2025 will not be enough to compensate for his losses in the years before. The federal government will not return to its level before the corona pandemic until 2023. The federal states should earn as much this year as they did in 2019, the coming ones should manage that in 2022.

A comparison with the last forecast before the corona pandemic shows that the crisis is anything but without consequences for the tax authorities. According to the figures of the official tax assessment working group, the tax revenue is increasing from year to year, but from a depressed starting value: 776.2 billion euros are expected this year, at the end of the time horizon in 2025 it should be 908.4 billion euros . Ultimately, however, you are lagging two years behind compared to the pre-Corona estimate.

The tax estimate is always the basis for further budget planning. The Federal Cabinet wants to adopt the budget draft for 2022 and the medium-term financial planning up to 2025 before the summer break. Because of the federal election, the MPs will no longer deal with it in this legislative period. Instead, the figures will shape the next coalition negotiations – but unlike recently, the negotiators will then not be able to wrestle about how much they also want to spend on what. Instead, it should be about cuts or tax increases.

Gross domestic product is likely to grow strongly

The tax estimate was based on the macroeconomic benchmarks of the federal government’s spring projection 2021. The nominal gross domestic product is projected to grow by 5.3 percent for 2021, 5.2 percent for 2022 and 2.6 percent for each of the years 2023 to 2025. Finance Minister Olaf Scholz (SPD) spoke of a good development. Despite tax relief, they see an increase of 10 billion euros compared to the forecast from last November.

The budget spokesman for the Union parliamentary group, Eckhardt Rehberg, sees the federal budget in a tense situation. According to him, the dynamics on the output side are unchecked. The CDU politician called on the federal government to finally keep moderation. “Anyone who promises new federal spending must explain their financing precisely,” warned Rehberg. This also applies to new federal subsidies to social insurance. It is not a proof of strength to finance new expenses with debt, but the easiest way imaginable. “We have a responsibility for solid finances – and a debt brake in the Basic Law, which must be complied with by 2023 at the latest,” emphasized the MP, who is not running for the Bundestag again.

The Green politicians Anja Hajduk and Sven-Christian Kindler called the results of the tax estimate an urgent appeal for an active financial policy. After Corona, Germany needs a reform of the debt rules in order to be able to finance more investments in climate protection, digitization, education and health. They promoted a new rule that allows net investments to be financed through loans. “That helps the economy, that helps people, that is just good for society as a whole,” they said. “Only with an investment turbo for a modern infrastructure can we achieve a strong and climate-neutral economy after the crisis.”

Friedrich Heinemann, head of the “Corporate Taxation and Public Finance” research department at the Leibniz Center for European Economic Research in Mannheim, was confident that the foreseeable end of the pandemic would lead to a brilliant economic upturn. This recovery will, with a delay, also raise tax revenues again. The economist warned against tax increases, which many parties have included in their election manifestos. Small and medium-sized companies in particular would be affected by plans ranging from a revival of the wealth tax to an increase in the top tax rate. You could affect their ability to invest. “The latest tax estimate confirms that there is no need for financial policy to take these risks if the policy on the expenditure side again shows more discipline after the pandemic,” said the researcher from Mannheim.