Germany sees tax intake $22.3 billion higher

[November 05, 2011]  BERLIN (AP) -- Germany expects its tax take this year to come in euro16.2 billion ($22.3 billion) higher than previously forecast, which should help the country balance its budget by 2016 at the latest, the government said Friday.

The new tax projection forecasts a total German tax take this year of euro571.2 billion -- up from the euro555 billion estimated in May.

"It's a result of very, very solid growth this year," Deputy Finance Minister Steffen Kampeter said. "But the overarching and long-term goal ... is that we aim at balancing the budget by 2016."

Referring to the eurozone's debt woes and the pressure on many governments to bring their budgets under control, Kampeter said "Germany demands discipline from many countries, therefore we also have to always be a model."

The 2011 projection was already revised upward in May, and the new estimate provides the government further leeway to cut its 2011 budget deficit down from an expected euro48 billion to "less than half" of that, Kampeter said.

That would bring the deficit down to about 1 percent of GDP -- well below the 3 percent deficit ceiling mandated by the eurozone.

As growth in Germany's economy -- Europe's biggest -- shows signs of slowing, the Finance Ministry expects next year's tax take to be only slightly higher than projected in May, up by euro7.4 billion to euro584.6 billion.

For the years 2011 through 2015 the government's new estimate expects a combined euro39.5 billion of additional tax take compared with the May projection.

"Germany remains Europe's anchor of stability with its solid fiscal and economic policies," Economy Minister Philip Roesler said in a statement.

Chancellor Angela Merkel's center-right coalition recently announced plans to ease the problem of small increases in income being eaten up by earners moving into higher tax brackets starting 2013.

It hasn't yet determined how to do that. The coalition has squabbled on and off for nearly two years over whether and how to deliver on pledges of tax relief.

Anton Boerner, the head of the country's BGA exporters association, called on the government to swiftly implement those "long overdue" tax cuts.

But Germany's main opposition party, the Social Democrats, said tax cuts "would be irresponsible" given the current uncertain economic outlook for the coming years.

The party's finance expert Joachim Poss added the government cannot cut taxes while it tries to convince the 17-nation eurozone to follow Germany's lead in adopting constitutional amendments requiring a balanced budget within years.

A new poll showed that Germans would like the government to cut taxes -- but when asked whether the priority should be to reduce the country's deficit or the tax burden, only 28 percent insisted on lowering taxes, with 62 percent saying the priority must be cutting the deficit.

The poll by public broadcaster ARD published late Thursday surveyed 1,002 Germans and had a margin of error of up to plus or minus 3.1 points.

[Associated Press; By JUERGEN BAETZ]

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