The federal and state governments collect less taxes

The federal and state governments have so far collected less taxes this year than at the beginning of the previous year. Compared to January and February 2022, 1.8 percent less flowed into the state coffers in the first two months of this year, according to the monthly report of the Federal Ministry of Finance published on Tuesday. February in particular had a negative impact of 4.2 percent.

According to the report, the reason for the lower tax revenue is primarily tax relief, such as the increase in the basic tax allowance and the adjustment for inflation in income tax. The temporary reduction in VAT on gas and district heating is also reflected here. On the other hand, there was more income from insurance and tobacco taxes.

The ministry identified signs of easing price pressure and referred to producer and import prices in this context. The price of oil is also stagnating, and the price of gas has recently fallen further. Inflation rates should therefore be lower over the course of the year. In February, inflation in Germany – as in January – was 8.7 percent. According to the Ministry of Finance, a slowdown in the labor market is not to be expected. "Companies are likely to continue to look for personnel in many areas."

At the same time, the FDP-led Federal Ministry of Finance referred to an imbalance in connection with financial aid for states and municipalities: the federal government is struggling with high deficits, while states and municipalities have recently achieved financing surpluses.

The monthly report by the Federal Ministry of Finance stated on Tuesday that the federal government had taken on the brunt of the crisis financing in recent years. "In order for the federal government to fulfill its original tasks within the framework of the regular upper limits of the debt rule and to be able to cope with the enormous challenges of the future, further relief for the federal states and municipalities by the federal government is no longer affordable."

Finance State Secretary Luise Hölscher announced that in the Corona crisis in 2020 and 2021 the federal government assumed around 72 percent of the pandemic-related expenses and 86 percent of the guarantees granted. In the relief packages in the course of the energy crisis, the federal government will bear almost 60 percent of the costs until 2024. "In addition, there is the massive support from the federal government for the states and municipalities in their areas of responsibility."