After the public coffers have been filling up ever since the financial crisis in 2009, the end is now for the time being: The federal government is expecting tax revenues of almost one hundred billion euros less than forecast in November this year. That goes from the Federal Ministry of Finance in Berlin published forecast of the tax estimates.
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Compared to 2019, the federal, state and local tax revenues are likely to fall by 81.5 billion euros – a decrease of more than ten percent.
Tax revenues are forecast to decline even more drastically than in the financial crisis. The outlook for the coming years is bleak. By 2024, the state is estimated to have around 315.9 billion euros less available than expected last autumn.
Federal government expects economic output to decline by more than six percent
Previously, the Federal Ministry of Finance had also estimated that the federal, state and local governments had around 100 billion euros collect less tax than expected in November. For comparison: According to the Ministry of Finance, the total tax revenue in 2019 amounted to around 800 billion euros.
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The basis for the tax estimate is the spring projection by Federal Minister of Economics Peter Altmaier (CDU) from the end of April. She predicted the economy this year will shrink by 6.3 percent. This not only causes trade and sales tax to collapse, but also income tax because of the drastic short-time work.
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The Ministry of Finance now estimates the costs of the Corona aid packages to be 453.4 billion euros in 2020 alone. In addition, there are guarantees of more than 800 billion euros, which may also have to apply if companies are unable to meet their credit obligations.
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156 billion euros of new debt might not be enough
It therefore suggests that the previously planned 156 billion euros in new debts in the federal budget are not sufficient to mitigate the consequences of the pandemic. In June, Finance Minister Olaf Scholz (SPD) wants to present a large stimulus package that should help the economy get back on its feet – but should also swallow up many billions more. Not only the companies, but also the financially troubled municipalities expect help.
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The Working Group on Tax Estimates includes experts from the federal, state and local authorities as well as experts from large economic research institutes Bundesbank and the Council of Experts to assess macroeconomic developments. Your estimate is the basis for the list of all public budgets. The advisory board at the Federal Ministry of Finance meets twice a year.
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