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Tax estimate 2025: Lower Saxony facing financial crisis? Armies warn!
Finance Minister Heere is calling for measures to stabilize the economy in Lower Saxony in view of falling tax revenues by 2029.
Tax estimate 2025: Lower Saxony facing financial crisis? Armies warn!
The current tax estimate for 2025 shows significant adjustments to the states' forecast tax revenues. According to Finance Minister Gerald Heere, who points to the need for discipline in budget planning, revenues have been revised downwards due to ongoing economic difficulties and changes in legislation. Lower Saxony can look forward to a slight increase of 102 million euros for the 2025 financial year, while the plans for the following years are characterized by a shortfall in revenue. The expected losses by 2029 amount to a total of 1.8 billion euros.
In detail, this means that Lower Saxony has to expect -568 million euros for 2026, -268 million euros for 2027, -252 million euros for 2028 and -208 million euros for 2029. The planned tax revenues for the next few years are also considerable: 35.9 billion euros are expected to be generated in 2025, 36.6 billion euros in 2026, 37.5 billion euros in 2027, 38.4 billion euros in 2028 and 39.3 billion euros in 2029. These numbers show the discrepancy between current challenges and long-term goals.
Economic challenges
The underlying reasons for the expected shortfall in revenue are not only the ongoing weakness of the German economy, but also the persistently high inflation, which is weighing on real earnings. The current tax estimate reveals that the higher revenues do not result from an actual increase in economic performance, but essentially from inflation-related adjustments. While the tax estimates working group formulated more positive expectations in its proposals for the years 2022 to 2026, there are currently significant risks - including the escalation of the war in Ukraine and a possible energy shortage.
“We need quick and broad-based growth impulses through reallocations in the budget,” emphasizes Heere. The aim is to stabilize the economic situation and strengthen the tax base in the long term. However, this is made more difficult by the fact that public spending is under pressure due to inflation-related additional spending of around 1.2 billion euros annually. The increasing costs of accepting refugees must also be integrated into the planning.
Detailed information on tax revenue
| Year | Planned tax revenue in Lower Saxony (in billion euros) |
|---|---|
| 2025 | 35.9 |
| 2026 | 36.6 |
| 2027 | 37.5 |
| 2028 | 38.4 |
| 2029 | 39.3 |
Short-term projects to improve the situation are underway. In September 2022, 300 million euros of the forecast additional revenue was used to finance the “Ukraine Aid Act”. Despite the current challenges, the region is showing some positive trends, particularly in terms of growth for Lower Saxony's municipalities, which can expect significant increases in the coming years.
It becomes clear that a comprehensive understanding of the financial situation and precise planning are crucial to successfully mastering the challenges. Pressure on public finances remains high and the need for thoughtful action will continue in the coming years. Further information and detailed reports can be found at Oscourier and the website of the Lower Saxony Ministry of Finance.