The federal and state governments collected 1.8 percent more taxes last year than the year before. The increase therefore remains well behind the inflation rate. And it doesn’t look like things will get better again quickly.
It’s the week of numbers: The Bundestag is discussing the 2024 budget. There is little to distribute, savings have to be made, the economy is running sluggishly. And the fact that things are going up again quickly makes it difficult to interpret the figures for the past year.
The German economy shrank by 0.3 percent in 2023. “A revival in economic dynamism is still a long way off at the beginning of 2024; companies’ short-term expectations have recently remained pessimistic across all sectors,” emphasized Christian Lindner’s Ministry of Finance. The federal government wants to publish the annual economic report with new economic estimates on February 21st.
Almost 830 billion euros in taxes in 2023
This is also reflected in the tax revenue for 2023. According to the ministry’s report on preliminary conclusion of the 2023 federal budget The federal and state governments collected 1.8 percent more taxes last year than the year before. In total there were 829.77 billion euros on the revenue side. The increase was well below the inflation rate of almost six percent.
The FDP-led ministry justified this with numerous relief measures from the traffic light government against high energy prices. In December 2023, tax revenue remained roughly stable at just under 109 billion euros.
Lindner: “No austerity budget”
Despite the bleak outlook, Minister Lindner does not want his budget for 2024 to be seen as an austerity budget. “Overall there is no saving. There is reallocation,” said the FDP leader ARD morning magazine.
Old subsidies for electric cars, for example, would be reduced in certain areas. This could reduce taxes for the working population and the electricity tax. “Overall, we are investing at a record level,” said Lindner, referring to spending on education and the gigabit network.
There will also be a gap in 2025 Billion gap
The Bundestag began its four-day budget debate in the morning, at the end of which the budget for the current year is to be passed on Friday. Spending of around 477 billion euros is planned. The debt brake is set to take effect again for the first time since 2019. The federal government can still take on up to 39 billion euros in additional debt. Military aid to Ukraine will be doubled to around eight billion euros.
Preparations are underway in the government to draw up the budget for 2025 and the financial plan until 2028. According to the Ministry of Finance, a gap in the lower double-digit billion range must be closed for the 2025 budget.