Tuesday, May 11, 2021
The “fat years” are just coming
Tax revenues are likely to be higher
In the corona pandemic, tax revenues collapse, while government spending increases massively. With the onset of the economic recovery, the treasurers, especially from municipalities and federal states, can expect more in the future than previously assumed.
Tax revenues in the coming years could be significantly higher than previously expected. Up to and including 2025, federal, state and local government revenues are likely to be 18 billion euros higher than expected according to the tax estimate from last November, reported the “Handelsblatt”, citing a presentation by the Federal Ministry of Finance for the current tax estimate.
The tax assessment working group has been advising on its new spring forecast since the beginning of the week. Federal Finance Minister Olaf Scholz wants to announce the results tomorrow, Wednesday. According to “Handelsblatt”, the majority of the now expected additional income will be attributable to the municipalities, which can therefore expect an increase of 9.9 billion euros by 2025. The federal states account for 5.9 billion euros in additional income and the federal government for 2.2 billion euros.
The reason for the improved forecast in the estimate template is, among other things, the slightly more optimistic growth forecast of the federal government, it said. However, the increases will therefore mainly only occur at the end of the forecast period. “The fat years are only at the end”, it was said according to the “Handelsblatt” from government circles. Due to the numerous special effects due to the corona pandemic, the forecast is much more complicated than usual this time.
The federal government is currently expecting economic growth of 3.5 percent this year. However, even with a significant increase of more than 20 billion euros, tax revenues would still be well below the forecast revenues from before the Corona crisis.
In addition to representatives from the federal, state and local governments, the tax assessment working group also includes other experts from economic institutes and authorities. His prognoses for the development of government revenues, usually in May and November, are the basis of budget planning.
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