Berlin (dpa) – The Corona crisis has ripped a huge hole in the state coffers – but the federal government is optimistic that the worst will soon be over financially.
Due to the third wave of corona, which is only slowly diminishing, federal, state and local governments will have to manage with around 2.7 billion euros less in tax revenue this year than expected in November. The tax assessors have also adjusted their forecast for 2022 downwards, the Ministry of Finance announced in Berlin on Wednesday. For the years up to 2025, the experts are now more positive: they have increased their 5-year forecast by 10 billion euros.
“Logging instead of messing around was the right choice, our determined aid policy is working,” said Finance Minister Olaf Scholz (SPD). Germany is in control of its finances. “Success like this doesn’t come out of the blue. It is the result of a formative policy, a policy that grabs instead of just watching. ‘
Due to the pandemic, there has been more uncertainty in tax estimates since last year than in the past. It is hard to predict whether a new wave of infections will slow the economy and consumption again, how the virus will mutate, and whether the vaccinations will go as planned.
Most recently, federal government utilities had repeatedly depressed tax revenues, such as the reduced tax rate in the hospitality industry, changed depreciation rules and new rules for compensating for business interruption. However, the tax assessors assume that the state will earn around 33.8 billion euros or 4.6 percent more this year than in the crisis year 2020.
An indication that tax revenues may soon pick up again is the federal government’s economic forecasts. “This year is the year in which we can finally manage the turnaround,” Minister of Economic Affairs Peter Altmaier (CDU) announced in April. The government expects economic output to grow by 3.5 percent in 2021 – making it more optimistic than at the time of the previous tax estimate.
Given the high pandemic costs and projected low tax income, Vice Chancellor Scholz plans with record debts for the current year. The Bundestag only recently approved its supplementary budget, which allowed it to receive a total of EUR 240.2 billion in new loans. The money is intended for pandemic-related expenses such as business and family help and for health measures such as the purchase of vaccines.
Union financial politician Eckhardt Rehberg stressed that low tax revenues were mainly at the expense of the federal government – on the other hand, states and municipalities had already returned to pre-crisis levels this year. Therefore, no further aid should come from the federal pot. Rehberg also called on the federal government to “finally hold moderation” and not promise new spending without explaining the funding. “It is not a sign of strength to finance new expenses with debt, but the easiest way imaginable,” he stressed.
Scholz, on the other hand, plans to have 81.5 billion euros in new debts next year. This would mean that the debt brake exception clause would have to be used again, which actually allows very little net lending. However, the budget for 2022 will be determined by a new Bundestag after the general election. Until then, election campaigners will have to answer the question of how they want to cope with the dire financial situation: continue taking on debt to cushion the pandemic’s effects, raise taxes or launch austerity program to meet the debt brake. again as soon as possible.
The tax assessments working group usually meets twice a year, in the spring and autumn. The committee is made up of experts from the federal government, the five leading economic research institutes, the Federal Statistical Office, the Bundesbank, the Advisory Council for the Assessment of Economic Development in Germany, representatives from the Ministries of Finance and local authorities.