Slight recovery: tax estimators with forecast for 2021 | Free press

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Berlin (dpa) – After significant tax cuts due to the Corona crisis, tax assessors released a new forecast for federal, state and local government income on Wednesday.

In the past year, lockdowns and the unwillingness of citizens to consume significantly less money flowed into the state coffers, among other things. For the current year, valuers had recently expected a slight recovery. Now there are signs that Finance Minister Olaf Scholz (SPD) may have a little more money to distribute than previously thought.

An indication of this are 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 the gross domestic product to grow by 3.5 percent in 2021 – and is therefore more optimistic than at the time of the previous tax estimate.

Given the pandemic’s high follow-up costs and previously projected low tax revenues, Vice Chancellor Scholz is planning record-breaking debts for the current year. Only recently did the Bundestag approved its supplementary budget, allowing for new loans totaling EUR 240.2 billion. The money is intended for pandemic-related expenses such as business and family help and for health measures such as the purchase of vaccines.

Before the tax estimators’ prediction, Scholz was optimistic. “If we do it wisely, we will meet all stability criteria again by the end of the decade,” Scholz told Funke media group newspapers on Wednesday in view of the EU Stability Pact. This obliges the euro area countries, among other things, to limit the government debt to 60 percent of the gross domestic product.

“There are many indications that we largely survived the corona crisis in the summer, when economic growth will pick up well again. That is already becoming clear, ”says Scholz. But it is also clear: “This is not the time when top earners, millionaires and billionaires, can expect tax cuts.”

The Association of Cities pointed out that despite all the optimism, the income of the municipalities in the coming years would still be significantly lower than expected for the corona pandemic. “Federal and state governments therefore urgently need to provide municipalities with financial support to support our investments. Otherwise there is a risk of serious cutbacks, ”said city council chairman Burkhard Jung to the newspapers of the Funke media group. So far, however, unlike in 2020, no joint federal and state aid is in sight. “We are concerned about investments in schools, digitization, traffic transition and climate protection in cities,” said Jung.

Given the tax estimate, the chairman of the taxpayers’ organization, Reiner Holznagel, warned of tax increases that could offset the expected falls in income. “For Germany to overcome the crisis, growth is required. That is why politicians go astray with their tiresome debates about tax increases: a higher burden does not create incentives for consumption and stifles the economic engine – that is absolutely counterproductive, “said Holznagel of the Neue Osnabrücker Zeitung.” “a smart mix of austerity policies, tax simplifications and selective tax credits”.

The German trade union federation (DGB) warned against austerity course. “The federal government must now do everything in its power not to jeopardize the economic recovery and to not let the infrastructure deteriorate further,” said DGB board member Stefan Körzell the “Handelsblatt”. Now huge government investments are needed, for which the state also needs financial space. The debt brake should therefore not be tightened up again for the time being and the corona debts should not be paid off hastily.