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Tax revenue fell significantly in March: budget negotiations face a difficult phase
Tax revenue in Germany fell significantly in March - experts warn of the impact on the 2025 federal budget. Find out more about the current development here. #Taxes #Economy #Germany
Tax revenue fell significantly in March: budget negotiations face a difficult phase
In March of this year, the federal and state governments in Germany recorded a significant decline in tax revenue compared to the same month last year. According to the latest monthly report from the Federal Ministry of Finance, revenue fell by 4.5 percent to a total of 77.55 billion euros. This decline marked the weakest month of the year so far, following notable increases in both January and February. Despite this development, the first quarter still recorded an overall increase of 1.6 percent to almost 203 billion euros.
Economist Jens Boysen-Hogrefe from the Kiel Institute for the World Economy (IfW) commented on the situation and explained that the recession was now also noticeable in tax revenues. These numbers are likely to complicate the upcoming negotiations on the 2025 federal budget. The new forecasts from the tax estimation working group are expected in May this year, which are intended to provide information about the extent to which the traffic light government will have to take austerity measures.
The first quarter of this year saw a decline in sales tax due to weak consumption. However, despite these declines, Treasury experts say the situation is expected to improve later this year. There were also declines in March with regard to income and corporation tax as well as revenue from property transfer tax. However, there are signs of possible stabilization. However, there were positive increases in income from the withholding tax on interest and sales income as well as in wage tax.
Despite the challenging situation, the latest economic data show a mixed picture, as experts from the Ministry of Finance announced. They note that private consumption could benefit from a possible recovery, especially if further increases in purchasing power occur. This trend is attributed in particular to sharply rising wages, a significantly lower inflation rate and a stable situation on the labor market.