By Andreas Kissler
BERLIN (Dow Jones) — German tax revenues extended their downward trend in April, falling 4.6 percent. This was announced by the Federal Ministry of Finance in its monthly report. “The tax relief measures contributed to this to a considerable extent,” the ministry said. The relief was particularly evident in the development of wage tax revenue, which declined by 1.8 percent despite the generally stable development on the labor market.
In particular, according to the ministry, revenue from community taxes fell by around 5 percent. The tax relief would have contributed to a “considerable extent”. Federal tax receipts increased by almost 1 percent due to higher receipts, primarily from energy taxes and insurance taxes. A decline in income from state taxes that has been ongoing since the second half of 2022 continued in the reporting month with a minus of around 17 percent compared to the same month last year. Above all, this is due to a 33.9 percent drop in revenue from real estate transfer tax.
In April, the federal government posted a total of 0.9 percent less tax revenue and reached 22.6 billion euros. The federal states received 24.8 billion euros in taxes, 6.6 percent less. Overall, tax revenue in April amounted to around 54.0 billion euros. Tax revenue had already fallen by 1.5 percent in March and by 4.1 percent in February compared to the same month last year, after having risen by 0.8 percent in January. In the first four months of the year, tax receipts fell by a total of 2.3 percent to 253.7 billion euros. While the federal government posted growth of 0.6 percent from January to April, the federal states received 4.2 percent less in taxes.
March declines only partial backlash
With regard to economic development, the ministry’s economists explained that “hard” indicators had recorded some significant declines in March. “This applied to production and incoming orders in industry as well as exports and retail sales.” The sharp declines “could only partly be interpreted as a backlash to the previous increases.” Foreign trade was also weak in March, and nominal goods exports almost completely lost the gains of the previous months. Likewise, there was no positive impetus from the retail trade at the end of the quarter.
“With a view to further economic development, the damper in March 2023 has significantly worsened the starting point for the course of the year,” said the ministry. The high level of heterogeneity, volatility and susceptibility to revision that can currently be observed in many economic indicators is not unusual in a context of high economic uncertainty. However, this also complicates the interpretation of the economic situation and increases the uncertainty for forecasts.
The development of sentiment indicators such as the Ifo business climate or the GfK consumer climate “still point to an economic revival in the further course of the year”. Likewise, the labor market has so far proved to be fundamentally robust in the face of the economic burdens, even if the spring revival on the labor market has been subdued this year in terms of unemployment.
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DJG/tank/apo
(END) Dow Jones Newswires
May 18, 2023 18:00 ET (22:00 GMT)