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Source: Federal Ministry of Finance Taxes

Scholz: “Our aid policy is working, things are looking up again”

The results of the 159th tax estimate show: Despite additional measures to contain new infections in November, tax revenues are overall stable compared to the interim estimate in September. For this and the next two years, income will develop significantly better than expected in September due to the comparatively good economic development. The figures for this tax estimate and the positive development since September are proof that the federal government’s resolute relief measures are taking effect, and the corona pandemic is far from over. We must continue to watch what is happening. And if necessary, we will act quickly and decisively. The current tax estimate shows that our decisions so far have been correct and that the economy is picking up again. That’s good news. Our aid policy is working and protecting the health of citizens does not conflict with the economic upturn. The Federal Government is determined to continue accompanying and supporting employees, the self-employed and companies through this crisis. I will continue this course. All of this costs money, of course, but doing nothing would be much more expensive. Federal Minister of Finance Olaf ScholzResults of the tax estimate in detailCompared with the tax estimate of September 2020, tax revenues in 2020 will be 10.6 billion euros higher. This results in additional income of 3.4 billion euros for the federal government and 5.3 billion euros for the federal states. The income of the municipalities will increase by 1.4 billion euros. In the years 2021 to 2023, the total tax revenue will also be above the estimate of September 2020. The year 2025 was estimated for the first time. The effects on the individual government levels are different. The “Tax Estimates” working group has forecasted EUR 3.4 billion for 2021 (federal government: EUR 1.7 billion), EUR 5.4 billion for 2022 (federal government: EUR 2.6 billion) and 2023 adjusted upwards by EUR 0.6 billion (federal government: EUR 0.6 billion) and downward by EUR 4.2 billion (federal government: EUR 1.6 billion) in 2024. The results of the tax estimate for 2020 up to 2025, differentiated according to federal, state, municipal and EU, are summarized in Appendix 1. In order to enable a comparison with the last tax estimate from September 2020, the deviations from these estimates up to 2024 are shown in detail in Appendix 2.

The tax estimate was based on the macroeconomic benchmarks of the federal government’s autumn 2020 projection, which in particular also depicts the expected effects of the Covid-19 pandemic on macroeconomic development. According to this, the federal government expects a very significant decline in real gross domestic product of 5.5% for this year and an increase of 4.4% in the coming year 2021. For the nominal gross domestic product, rates of change of -3.8% for the year 2020, +6.0% for the year 2021 and +4.3% for the year 2022 and of +2.6% each for the years 2023 to Projected 2025. A relevant macroeconomic assessment base for the tax estimate is gross wages and salaries (BLG). As part of the current autumn 2020 projection, the BLG were adjusted as follows compared to the interim projection from September 2020: A 1.6% decline in gross wages and salaries is assumed for 2020. This is a decrease 0.4 percentage points weaker than estimated in the 2020 interim projection. For 2021, the projection was raised by 0.3 percentage points from + 3.2% to + 3.5% and for 2022 from + 2.8% to + 3.2%. For the years from 2023 to 2025, on the other hand, BLG’s annual growth rates of 2.8% are expected to remain unchanged. The corporate and property income (UVE) is the central update variable for the profit-related types of tax and is particularly affected in the current year. A sharp decline in the EIA of 10.3% is expected for 2020, which, however, would have been much stronger without the various corona aid for companies. A recovery will set in here from next year, too, with projected growth rates of 8.7% for 2021, 0.9% for 2022 and an annual increase of 2.7% for the years 2023 to 2025. The tax estimate is based on the current tax law . Compared to the previous estimate from September 2020, the financial effects of the Seventh Act to amend the Motor Vehicle Tax Act of October 16, 2020 (Federal Law Gazette 2020 I No. 47; p. 2184) and the increase in the average additional contribution rate to the statutory health insurance from January 1, 2021 (BAnz AT 10/30/2020 B 5). The 159th meeting of the “Tax Estimates” working group took place from November 10 to 12, 2020 as a video conference.


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