Brandenburg Anticipates Decline in Tax Revenue

Thu 23rd May, 2024

Image by Dmitriy from PixabayA recent tax estimate reveals a sobering outlook for Brandenburg's fiscal landscape, as economic trends in Germany translate into diminished tax receipts for the state. Finance Minister Katrin Lange (SPD) conveyed concerns about the impending fiscal downturn during a press briefing in Potsdam on Thursday, following an analysis of tax assessor data from May. With just four months remaining until the state election, Lange cautioned against overcommitting to expansive spending initiatives, citing the constrained financial outlook.

According to the Ministry of Finance, Brandenburg is bracing for a revenue shortfall of approximately 109 million euros this year compared to the tax projections outlined in October 2023. While this year's budget initially boasted an additional revenue of roughly 145 million euros, the revised tax estimate paints a bleaker picture, with anticipated shortfalls of 188 million euros in 2025 and 146 million euros in 2026 compared to previous forecasts.

Lange underscored the influence of Germany's sluggish economic growth on Brandenburg's fiscal fortunes, noting that despite the state's recent economic performance outpacing the national average, it remains susceptible to broader economic trends, particularly concerning communal taxes. Although an economic rebound was anticipated, Lange lamented the continued downturn in construction investments, albeit expressing optimism for a reversal by year-end.

Despite the projected decline, the tax estimate predicts modest revenue growth in the coming years, with anticipated figures reaching approximately 11.8 billion euros in 2024, 12.3 billion euros in 2025, and 12.8 billion euros in 2026. However, these figures fall short of previous expectations, indicating a challenging financial climate ahead for the state.

Image by Dmitriy from Pixabay


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