The debate over the budget is putting the coalition to the test. Today it is clear how much money can be expected from tax revenues. The traffic light should not hope for a surprise windfall.
In the coming year and perhaps this year, the federal, state and local governments will together collect more than a trillion euros in taxes – tax estimators are still poring over the exact figures. But for FDP Finance Minister Christian Lindner it is already clear: “This state has no revenue problem.” The level of public revenue is significantly higher than before the pandemic.
The focus in the budget negotiations is therefore primarily on expenditure. Lindner made austerity targets, but not all ministries met them in the first round. There are individual departments that have “submitted exorbitant wish lists – Christmas, Easter, birthdays all together, so to speak.” That is not acceptable.
Discussion about budget requests
The budget preparation didn’t go smoothly last year. Lindner had to get support from Chancellor Olaf Scholz in the budget talks. This time too, the SPD Chancellor is supporting the FDP Finance Minister – the austerity targets have been agreed with him. “We are definitely spending more money than before,” said Scholz. “The question is whether we will spend even more money or whether we will not be able to fulfill all the wishes that exist – that will certainly be the case.”
This is likely to particularly affect the Foreign Office and the development aid department, and thus the ministers Annalena Baerbock and Svenja Schulze. It is also unclear what will become of Family Minister Lisa Paus’ planned basic child security.
Defense Minister Boris Pistorius’ budget wishes were also recently discussed. According to media reports, he was disappointed by the Chancellor’s lack of support and even said internally: He didn’t have to do that here. Deputy government spokesman Wolfgang Büchner commented on this with the following words: “The government is facing the challenges of the ‘turning point’ together, so no one will be left in the lurch.”
Low Growth prospects this year
Even if the Chancellor holds out the prospect of an amicable solution, coalition politicians also admit behind closed doors that the budget has the potential to blow up the traffic lights. And that in turn is causing unrest, warns economist Achim Truger: “What is currently happening is an economic risk.” The uncertainty itself is a problem. “And depending on whether cuts have to be made at the federal or state level, that would be an additional economic risk.”
It cannot be assumed that the tax assessors could help to quickly resolve the dispute over the budget. Simply because of the lower growth prospects for this year. In principle, the higher the expected growth, the higher the tax revenue. With a growth forecast of only 0.3 percent, the tax estimate is not expected to be a surprising windfall for the traffic light.