Surprise
Despite the crisis, the state of Baden-Württemberg can plan for additional income. However, there is bad news for the municipalities.
We need your consent to display BotTalk
BotTalk may collect personal data for its own purposes and process it in a country with an inadequate level of data protection according to EU standards.
By clicking on “Accept” you give your consent to the data transfer, which you can revoke at any time via the cookie settings.
Accept
More information
Baden-Württemberg can expect significantly higher tax revenue than expected despite the weak economy. According to the current tax estimate, the country will have additional revenue of a good 1.5 billion euros this year and next year compared to what was planned when the budget was drawn up. This was announced by the Ministry of Finance.
“In view of the economic stagnation, the positive development of tax revenues comes as something of a surprise,” emphasizes Finance Minister Danyal Bayaz (Greens). The planned reduction in VAT in the catering industry and the tax losses due to the increased commuter allowance have already been included in the calculation.
There was bad news for the municipalities: Due to a sometimes significant drop in trade tax, according to the latest estimate, they will receive 1.16 billion euros less this year and next than previously expected. The minus is therefore 526 million euros this year and 630 million euros next year.
Finance Minister Bayaz also warns against euphoria. The estimate is by no means a trend reversal. “One swallow doesn’t make a summer. The economic situation remains extremely tense.” The chip crisis in the automotive industry alone clearly shows how fragile the supply chains still are, says Bayaz. “This can also have an impact on tax revenue at any time.” In addition, there is a gap of around five billion euros annually in the so-called medium-term financial planning from 2027. “We have to close them first before we talk about additional spending.” The state government’s current double budget for 2025 and 2026 has a total volume of around 136 billion euros. 1.5 billion euros more corresponds to just under one percent.
According to the ministry, the state urgently needs the additional revenue in order to meet its financial commitments to the municipalities: the state had promised them additional support of 550 million euros. In addition, the municipalities should receive additional funds for inclusion in schools (87.2 million euros) and school support at special education and advice centers (47 million euros).
The country also wants to keep saving money – as a “provision for future shortfalls in tax revenue”. And since the economic forecast is improving, for legal reasons the country is now allowed to incur less debt than planned in the budget – specifically, 288 million euros less. “This too has to be paid for through the tax increase,” says the Ministry of Finance.
The basis of the tax estimate is the federal government’s current economic forecast. This assumes economic growth of 0.2 percent this year and 1.3 percent in 2026. The federal government expects that the German economy will pick up again after years of slack and that its support measures will be effective – such as more generous depreciation rules for companies that invest in Germany. The planned investments from the debt-financed special fund worth billions are also intended to stimulate the economy. A better economy means higher tax revenue.
