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Tax revenues will rise above pre-crisis levels in 2021
01/28/2022, 08:19 am
The first year of the crisis, 2020, tears a big hole in the federal budget, but a rapid recovery will already set in in 2021: Tax revenues will increase significantly. Even the balance of 2019, which was unaffected by Corona, is slightly exceeded. The states benefit much more than the federal government.
Federal and state tax revenues increased significantly again last year. Compared to the first Corona crisis year 2020, they increased by 11.5 percent to almost 761 billion euros, as announced by the Federal Ministry of Finance. Despite the ongoing pandemic, slightly more tax revenue came in than in the pre-crisis year of 2019 (735.9 billion). The forecasts of experts were once again clearly exceeded with this result. The tax estimation working group had recently assumed almost 745 billion. In December 2021, the momentum was even stronger. There was an increase in revenue of 19.5 percent for the federal and state governments with 111.5 billion euros.
The federal states benefited from the economic recovery, while the federal government still has to shoulder many corona burdens. Overall, pure federal taxes fell by 7.1 percent in 2021, while taxes accruing to the states alone rose by 13.8 percent. There was a 15 percent increase in taxes due to both tiers. Last year, the German economy grew by 2.7 percent. However, this has not yet compensated for the 4.6 percent slump from the first year of the Corona crisis in 2020.
The at least better economic development is also reflected in taxes: the sales tax – reduced for six months in 2020 – climbed by 14.3 percent in 2021, income tax by 14.8 percent and the corporate income tax, which depends largely on the profit development of companies, by almost 74 Percent. The increase in travel activity also had an impact: the air traffic tax was almost 94 percent above the 2020 level.
There are no signs of a real easing of the recent sharp rise in inflation after inflation stood at 5.3 percent in December. “At the beginning of 2022, the inflation rate should fall somewhat,” said the Ministry of Finance. “Nevertheless, the rate should initially remain at a level that is noticeably higher than in the years before the crisis.” Further declines to a more moderate level are to be expected in the course of the year. Economics Minister Robert Habeck said this week that he would expect an inflation rate of 3.3 percent (2021: 3.1 percent) in 2022 and would only see a decline to two percent again in 2023.