Federal Ministry of Finance on Wilhelmstraße: Abolition of the solos puts pressure on federal taxes
Florian Gaertner / phototek / imago images
In 2020, the German economy and with it tax revenue collapsed due to the corona pandemic.
The economic recovery from spring 2021 is now causing federal, state and local tax revenues to rise significantly again last year.
Compared to the first year of the Corona crisis, they increased by 11.5 percent to almost 761 billion euros, as the Federal Ministry of Finance announced.
Above all, revenue from community taxes, such as wage and income tax as well as sales tax, rose again significantly due to the improved economic situation.
Sales tax, which was reduced for six months in 2020, climbed by 14.3 percent in 2021, income tax by 14.8 percent and corporate income tax, which is largely dependent on company profits, by almost 74 percent.
The increase in travel activity also had an impact: the air traffic tax was almost 94 percent above the 2020 level.
Inflation rate likely to remain high
With the increases, the forecasts of experts were once again clearly exceeded. The tax estimation working group had recently assumed almost 745 billion. In December 2021, the momentum was even stronger. There was an increase in revenue of 19.5 percent for the federal and state governments with 111.5 billion euros.
While the federal states in particular benefited from the economic recovery, the federal government still had to shoulder many corona burdens.
Overall, pure federal taxes fell by 7.1 percent in 2021.
This was mainly due to the abolition of the solidarity surcharge for most citizens.
Because people drove and traveled less in the second year of the pandemic, income from the taxation of petrol and diesel also fell.
The taxes accruing to countries alone, on the other hand, climbed by 13.8 percent.
There was a 15 percent increase in taxes due to both tiers.
Even if the German economy grew by 2.7 percent in 2021, the 4.6 percent slump from the first year of the Corona crisis in 2020 could not yet be compensated for.
The unexpectedly high tax revenue, however, contributed to the fact that the federal government had to take out fewer loans last year than expected.
Around EUR 24.8 billion in credit authorizations were not used.
In addition, Finance Minister Christian Lindner (FDP) wants to shift unused loans into the energy and climate fund to the tune of 60 billion euros so that they can be used for investments in climate protection and transformation in the coming years.
However, there are no signs of a real easing of the recent sharp rise in inflation after inflation stood at 5.3 percent in December.
"The inflation rate is likely to drop somewhat at the beginning of 2022," according to the Ministry of Finance.
"Nevertheless, the rate should initially remain at a level that is noticeably higher than in the years before the crisis."
Further declines to a more moderate level are to be expected in the course of the year.
Economics Minister Robert Habeck said this week that he would expect an inflation rate of 3.3 percent (2021: 3.1 percent) in 2022 and would only see a decline to two percent again in 2023.