Post-July-Delle, there's a significant surge in tax revenue collections.
The financial situation is still shaky, as indicated by the Ministry of Finance, even in regard to tax earnings. These witness substantial shifts all through the year. They dropped considerably in July, but bounced back robustly in August, as per the departmental monthly report by Lindner.
Tax incomes for both federal and state authorities surged once more in August. Compared to last year, there was a 5.3% surge, reaching roughly 62 billion euros, as stated in the Ministry of Finance's monthly report. Conversely, revenues fell by almost 8% in July. Due to the sluggish economic growth, tax incomes have been quite volatile this year.
In the first eight months, there's a plus of 2.3%. The combined tax incomes of federal and state authorities amounted to approximately 540 billion euros. Professionals anticipate a rise of around 4% for the entire year 2024.
In August, there were increases, like that in the withholding tax on interest and capital gains. The wage tax also saw a substantial increase owing to recent salary hikes in various sectors. However, corporate tax and value-added tax saw a decline because of the continued weak consumer spending in the country. Fresh revenues from the European Union's energy crisis contribution, which was not in existence previous year, were also recorded.
Labor market struggles
"The near-term economic forecast remains uncertain," the Ministry of Finance's monthly report also mentioned. The federal government will share updated forecasts for the economic outlook in the coming years on October 9th.
The assessment of the current scenario has deteriorated more than the business outlook. The poor business climate in the manufacturing sector is likely due to the weak order situation. The business climate in the service sector has also worsened again after an improvement in recent months, and consumer confidence has taken a hit. Among the hard indicators, the production figures were surprisingly weak. The situation in foreign trade looked a bit better.
"The economic standstill is increasingly evident on the labor market," the Ministry of Finance pointed out. The growth in employment has almost come to a halt. Although the seasonally adjusted unemployment rate barely increased in August, it is significantly higher than the previous year. The reduced economic vitality is also evident in short-time work, which has risen again.
Despite the challenging economic conditions, the surge in tax revenue in August was noteworthy, with a 5.3% increase compared to the previous year, reaching approximately 62 billion euros. However, this positive trend was preceded by a decline of almost 8% in July, contributing to the overall volatility in tax earnings for the year.
