German finance ministry expects tax revenues to fall by €81.5 bln in 2020

Xinhua News,BERLIN
2020-05-15 05:23

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BERLIN, May 14 (Xinhua) -- Germany would have 81.5 billion euros (88 billion U.S. dollars) less tax revenues in 2020 than last year, the German Ministry of Finance announced on Thursday.

However, the coronavirus crisis would be financially manageable despite the loss of taxes and remaining uncertainties "thanks to the good budgetary policy of recent years," said Federal Finance Minister Olaf Scholz.

The government had adopted a range of measures to help companies and employees during the coronavirus crisis, for example, by increasing financial support for short-time work or providing loans for companies and businesses.

"All these measures were important and right. All these measures have an impact on the tax revenues of the state," the ministry noted. The expected tax losses in 2020 would be caused by a drop in company profits, a drop in sales as well as an increase in short-time work caused by the coronavirus crisis.

Furthermore, part of the expected tax decline was due to the fact that the government had introduced regulations on tax deferrals and loss carryback that aimed at reducing the economic consequences of the COVID-19 pandemic in Germany, according to the ministry.

"These measures will have a positive effect in the following years, as the additional liquidity of many companies secured their continued existence and thus tax revenues," the ministry noted.

For 2021, the ministry estimated that tax revenues in Germany could increase again by 10.4 percent to 792.5 billion euros.

"We have invested a lot of tax money to help employees and companies through this difficult time," stressed Scholz. The next step would be to use targeted measures to get the economy moving again, "so that industry, trade and commerce can get back into business better."

The Federation of German Industries (BDI) noted on Thursday that the tax estimates confirmed "our gloomy expectations."

"Large parts of the public budgets are collapsing," said Joachim Lang, head of the BDI. In this situation, tax increases and capital levies would be the "absolute wrong way to compensate for these extraordinary revenues shortfalls."
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