German Tax and Legal News-June 2004
Mondaq Business Briefing › Germany Law Articles in English (2004)
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German Tax and Legal News-June 2004
Tax Revenue Shortfall Of € 10 Bn In 2004 Expected
The ministry of finance released the latest six-monthly tax revenue estimates on May 13. The estimates for 2004 have fallen by € 9.6 bn from the previous estimate of November 2003. The shortfall in the following years is expected to be even higher - € 15.2 bn in 2005, € 18.4 bn in 2006 and € 17.8 bn in 2007. The estimates are based on present law and assume GDP growth rates of 2.3% in 2004, 2.7% in 2005 and 3.4% in each of the years thereafter. These planned, or assumed, growth rates contrast with the provisional actual growth rate in the first quarter of 2004 as published by the Statistics Office of 0.4% over the previous quarter and 1.5% over the first quarter of 2003. Initial reactions from members of the government seem to suggest a degree of surprise at the amount of the deficits. The finance ministry has published statements to the effect that the "not yet finally secured economic upswing" would be endangered by tax increases or cuts in government spending. It has also said that it wishes to keep to its plan of cutting housing grants in order to free funds for science as an "example of the urgently needed improvement in the quality of government spending". The chancellor preceded the finance ministry with a call a day earlier on other Eurozone governments for a "growth oriented" interpretation of the Stability and Growth Pact of Maastricht. He claimed that there was a debate within Europe on whether the 3% limit (on the annual budget deficit) was the only "economically reasonable criterion" and said that he expected discussion on this point to intensify during the next few months. Bundesrat Approves Treaties With Po...See the full content of this document
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