AOn Thursday, Finance Minister Christian Lindner (FDP) will announce from far away Japan what the federal, state and local governments can expect in terms of tax revenue up to the year 2028. Most recently, 993 billion euros were forecast for the next year, of which 390 billion euros are attributable to the federal government. After the federal government assesses the prospects for the German economy as somewhat brighter, the trillion mark could be reached as early as next year.
That was last predicted for 2025. Because the Federal Minister of Finance will be in Niigata at the end of the week to meet his counterparts from the group of the seven most important industrialized countries, Lindner will only be able to be seen virtually at home – at the usual time in the afternoon (in Japan it is then 10 p.m.).
The high inflation helps the Treasury, since the tax burden mostly depends on nominal values. Since the traffic light adjusted the income tax rate to the currency depreciation in autumn and this could not be taken into account in the estimate at the end of October (the legislation had not yet been completed at the time), the additional result should ultimately be kept within narrow limits. For the foreseeable future it will not be enough to close the gap in the federal budget, which the Federal Ministry of Finance recently put at 18 billion euros – without the additional demands of the other departments.
Talks on the 2024 budget were recently suspended. Can the tax estimate put an end to the coalition’s self-blockade? Simple question, amazing answer: The Federal Ministry of Finance does not assume that the responsible working group will forecast such high additional income that all traffic light problems will be resolved with pleasure. On the contrary, at most a small plus is considered possible. And yet it could be the moment that will lead to a resumption of talks at ministerial level.
The usual tax plus has long been planned
When the framework for the budget is fixed, the necessary decisions can no longer be postponed. After all, the cabinet wants to approve the draft budget for next year on June 21st. Unlike in the previous decade, there are no benchmarks for this. There is not much time left, work all the more. The federal budget last consisted of 1,500 pages with many more titles, as the budget politicians call the individual expenditure items.
So far, the coalition has avoided concrete austerity decisions. Recently, gigantic loans helped to bridge all the gaps. Before that, additional tax revenue always came at the right time. Now you have to save in order to be able to comply with the debt rule, which Lindner insists on. The traffic light has also set itself the task of “reducing superfluous, ineffective and environmentally and climate-damaging subsidies and expenditure”. But not much has happened there yet. In a “savings book”, the taxpayers’ association reminds how much higher interest rates and foreseeable repayment obligations will hit the bank. The usual tax plus has long been planned. The interest group is therefore calling for spending cuts.
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