By Andreas Killer
BERLIN (Dow Jones) — German tax revenues rose significantly by 17.2 percent in March. This was announced by the Federal Ministry of Finance in its monthly report. According to the information, the increase in revenue was mainly due to an increase in community taxes of 18.4 percent. “Compared to a previous year’s basis, which had been significantly weakened due to the corona pandemic and the tax measures taken in connection with it, there were considerable growth rates in the revenue from most types of taxes,” the ministry said. “The effects of the Ukraine conflict have not yet been recorded in tax revenue.”
A particularly high increase was shown in sales taxes, which rose by 26.8 percent to 22.3 billion euros. The reason given was that, as in the previous year, import sales tax revenue from the previous month was only cashed in March due to the short period between the due date and the end of the month in February, and wage tax and income tax had shown a noticeable increase in revenue compared to the same month last year . In addition, in the first month of advance payments in 2022, both the assessed income tax and the corporation tax recorded significant increases.
In February, tax revenue had already risen by 15.5 percent against the background of a weak previous year due to corona. In January they had shot up by 22.4 percent and in December 2021 by 19.5 percent compared to the same month last year.
In March, the federal government booked 20.9 percent more tax revenue and reached 35.9 billion euros. The federal states received 38.0 billion euros in taxes, 16.5 percent more. In total, tax revenue in March amounted to around 82.4 billion euros. In the first three months of 2022, tax revenue increased by 18.1 percent to 203.1 billion euros. The federal government recorded an increase of 28.7 percent and the federal states recorded growth of 18.1 percent.
Ministry: The effects of the war cannot yet be quantified
The ministry was pessimistic about the economy. “While the domestic effects of the corona pandemic on the German economy are currently easing, Russia’s war of aggression in Ukraine, which began in February, is dampening the prospects,” says the report. Official statistics, for example on production in the manufacturing industry or sales in the service sector, are only available with some time lag, so that the direct effects on economic activity cannot yet be precisely quantified. However, sentiment indicators painted a clearly gloomy picture in March.
After the Ifo business climate had recovered noticeably at the beginning of the year, business expectations in the German economy in particular had clouded over in March as a result of the Russian attack on Ukraine. In addition, according to the Ifo Institute, in view of the war, the uncertainty of companies with regard to the business outlook has increased significantly. “The war is directly contributing to rising energy and food prices, increasing general uncertainty and putting additional strain on the supply chains in individual branches of industry, which are already strained by the pandemic,” the ministry’s economists stated.
Despite the current geopolitical conflict, the positive trend on the labor market has continued. The estimated use of short-time work decreased in the course of the first quarter of 2022, leading indicators for employment and unemployment “continued to point to a recovery course”.
Against the background of the war, the inflation rate rose sharply again in March from an already significantly higher level, mainly due to the rise in energy prices. At the moment, the prices on the gas and oil markets are below the price peaks that have been observed in the meantime, but are still well above the level of the previous year. In surveys conducted by the Ifo Institute in March, the proportion of companies planning to raise their prices in the next three months rose again. “Together with the continuing strong upward pressure from import and producer prices, this makes it clear that the inflation rate is likely to remain at a very high level in the coming months,” the ministry said.
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DJG/tank/apo
(END) Dow Jones Newswires
April 21, 2022 18:00 ET (22:00 GMT)