The citizens are worried about the high prices – and the treasurers of the federal, state and local governments are happy. Because the tax revenue also increases proportionately. On the other hand, the previous aid packages are having a noticeable impact.
Despite the economic downturn, the state can apparently expect significantly higher tax revenues in the coming years. Compared to the tax estimate from May, the federal, state and local governments could calculate around 110 billion euros more by 2026, reported the “Handelsblatt”, citing coalition and estimator circles. This emerges from the estimate templates for the meeting of the working group on tax estimates, which starts today. Federal Finance Minister Christian Lindner will present the final result of the tax estimate on Thursday.
However, it is unclear how the income is distributed among the individual corporations. The overview of the expected funds should also form the basis for the negotiations between the federal and state governments on the distribution of the costs from the third relief package. To this end, Chancellor Olaf Scholz and the Prime Ministers will meet next Wednesday.
One of the main drivers of the rising tax revenue is high inflation. The higher the prices rise, the more taxes the state collects. For example, the sales tax – commonly known as value added tax – flushes more money into the state coffers. In addition, despite the crisis, employment is still high, which means that wage and income tax is going well. Corporate income taxes also proved to be robust, the “Handelsblatt” reported.
At the same time, tax receipts were surprisingly good this year despite the downturn in the economy. In the first nine months, the state took in around ten percent more than in the previous year with a good 593 billion euros. The federal government also expects the economy to pick up significantly again from 2024, which will mean that tax revenue will increase significantly again from this year. Compared to the May tax estimate, this will result in additional income of between 140 and 160 billion, as the newspaper further reported.
However, the federal government passed a number of reliefs this year to combat the crisis, which significantly reduce income. For example, the tax relief law has an annual effect of 16 billion euros, the reduction in value added tax on gas consumption and gastronomy with a total of around eleven billion euros, the annual tax law with over ten billion euros.
The tax estimation working group estimates future tax revenues in the spring and autumn of each year. The forecasts form the basis for budget planning at federal, state and local level. In addition to representatives from the federal, state and local governments, the working group also includes other experts from economic institutes and authorities.
