German tax revenue rising, but cuts are not in the cards

12th May 2011, Comments 0 comments

German tax revenues are expected to surpass forecasts by 17.7 billion euros ($25 billion) this year, the finance ministry said Thursday, but that will probably not lead to tax cuts.

A ministry statement said it estimated tax receipts would amount to 555 billion euros this year in the biggest European economy, which is officially forecast to grow by an upwardly revised 2.6 percent.

Surplus receipts by 2014 could total 135.5 billion euros for municipal, regional and federal governments, finance ministry experts have calculated.

By next year, they might reach a level last seen before the global economic crisis in 2008.

But the chances are slim that Finance Minister Wolfgang Schaeuble will drop his opposition to tax cuts before legislative elections in 2013, something being pushed for by coalition partners from the Free Democratic Party.

The ministry's new estimations "give no more room for manoeuvre," it said on Thursday, as Germany pursues the goal of reducing its public deficit.

In the coming years moreover, the German budget will probably be weighed down by more aid to indebted eurozone partners, while rising interest rates will likely increase the amount Germany must pay on its own outstanding debt.

A German move to abandon nuclear energy will also entail significant costs, the ministry noted.

© 2011 AFP

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