World Economy

Germany Tax Revenues Grow

Germany Tax Revenues GrowGermany Tax Revenues Grow

A three-day annual conference of tax experts has concluded that Germany’s tax revenues will continue to grow in coming years. The revenues will come in handy as the country spends additional money to integrate migrants.

At the close of a three-day workshop in Nuremberg, tax experts from Germany’s local, state and federal finance ministries released a prognosis that tax revenues would continue to grow in line with the German economy. The experts estimated that 2015 total tax revenues for all levels of government would amount to €671.7 billion ($731 billion), and by 2020 would rise to €795.6 billion, DW reported.

“The German state’s solid finances make it capable of taking action,” said German Finance Minister Wolfgang Schauble. “In view of the challenges we face, that’s of decisive importance. With the help of this year’s surplus, current indications are that we’ll be able to get through 2016 as well without adding to cumulative debt.”

The last session, in May 2015, had projected total tax revenues for 2015 at €5.2 billion less than the current (November) session’s estimate–the government’s kitty for this year will be slightly fatter than had been expected six months ago.

The federal government is expected to take in €4.9 billion less in tax revenues in 2016 than had been projected in May, and municipalities 1.9 billion less. On the other hand, Germany’s states are now projected to take in 3.4 billion more in 2016 than had been projected in May.

But continued economic growth in 2017 and beyond is expected to overwhelm any blip in tax revenues resulting from those tax-code changes, and revenues will continue to rise at a healthy clip.

 Upward Trend

Gross (pre-tax) wages and salaries are the most important factor for calculating estimates of tax revenues, and the experts estimated that total wages and salaries earned by Germans in 2015 would end up 4% higher than they had been for 2014. These numbers are for the nation’s total wage packet–they are not per-capita figures.

Growth in the nation’s aggregate wage packet is projected to be 3.5% in 2016 and 2017. The 2016 figure is 0.6% more than had been projected in the May session of the Tax Estimates Workgroup. For 2018 through 2020, the finance ministry’s project an annual wage packet growth of 3%.

Incomes and earnings of German businesses and corporations are also expected to grow in coming years. The estimate for 2015 is that total earnings will grow by 5.3% year-on-year compared to 2014; for 2016, the projection is 4.5%.