Finances: Tax estimate tightens household worries until 2029

The black and red federal government must expect significantly fewer tax revenues to implement its coalition agreement by 2029 than in autumn. According to the Ministry of Finance, the tax assessors predict that 33.3 billion less flow into the federal funds when they thought in October. That should not make the work of the new finance minister Lars Klingbeil easier.

“The results show: We have to strengthen the income through higher economic growth,” said the SPD politician. “This is the only way to win new financial scope. We have now entered the greatest modernization of our country for decades.” Overall, the result of the tax assessors is largely the way it was expected during the coalition negotiations.

The tax assessors are also pessimistic for the overall state, i.e. the federal government, the federal states and municipalities. Around 81.2 billion less income awaits you by 2029 than predicted in October.

Why the forecast is so mau

An important basis for the estimate of the tax revenue is the federal government’s economic forecast. And it showed at the end of April: the economy is on the spot. For the third time in a row there is no growth that stagnates gross domestic product. And even in the coming year, the government is hardly upgrading and only growth of 1.0 percent.

What this means for the 2025 budget

With these figures in the luggage, the new finance minister Lars Klingbeil must now set up the budget for the current year – significantly late because of the traffic light break and the early Bundestag election. On June 25th he wants to bring the plans through the cabinet – and it is to be expected that there will hardly be anything left of the design of his predecessor Christian Lindner (FDP). Too much has changed politically since then, and too many switches have set up black-red.

For 2025, the tax estimate is still comparatively harmless, the estimator expect 0.6 billion less income than in autumn. This is mainly due to the fact that citizens were relieved for tax purposes last year – but also due to the poor economy. The numbers have already been taken into account in the planning, said Klingbeil. However, setting up the budget will not be easier.

Already on Wednesday he had attuned his cabinet colleagues in the Bundestag that there was no unlimited scope despite historical credit options. “Yes, we will also have to advance budget consolidation,” said the Vice Chancellor.

Whether the new budget can actually be decided as planned in early September will depend on how much colleagues are involved. In any case, the opposition is putting pressure: even longer with provisional housekeeping, i.e. without real budget, is poor for the work of the ministries, bad for the economy and bad for the entire country, the Greens criticized.

What other black and red households that means

Union and SPD was already clear when it comes to formulating their coalition agreement that their numerous projects cannot be financed easily – at least not without a clear economic upswing. All agreements of the coalition agreement are therefore subject to a financing reservation. That means: You will only be implemented if there is enough money available.

The figures of the tax assessors are likely to underline the importance of this sentence. In the coming year alone, the experts for the federal government are now expecting 10.2 billion euros less income than in autumn. Even if the overall state could take more than a trillion euro for the first time, Klingbeil now has to compose and prioritize with Chancellor Friedrich Merz and the other ministers. What is financed first, what do you have to develop scope for?

Opposition sees “Financial Political Sackgasse”

With the negative tax estimate, the “few good projects” of the black and red coalition are waste, fears left-wing politician Dietmar Bartsch. Before the summer break, the coalition had to bring a “package of measures for new growth and a fundamental reform of the debt brake to the Bundestag,” said Bartsch.

Grünen-Hausher Sebastian Schäfer also explained that the coalition was “with its coalition contract wish list to quickly get into a cos of sackgasse”. The air in the federal budget is getting thinner, black and red must now set priorities and steer funds to where they do the most economically and socially.

A significant growth is to be expected in the case of defense spending – this is the relaxation of the debt brake. This means that the federal government can virtually unlimited loans for the Bundeswehr and other defense policy purposes. Billions financed are also available for infrastructure investments, i.e. for streets, rails, daycare centers, energy networks, internet and living space. However, the special fund may only be used for additional expenses, i.e. only if there are considerable investments in the core budget.

“The tax estimate once again illustrates that we have to get our country going again with massive future investments,” emphasized the deputy chairman of the SPD parliamentary group Wiebke Esdar. With the special fund for infrastructure, the prerequisites have been created.

How the tax assessors work

The tax assessment working group comes together twice a year, in spring and autumn. In the committee, experts from the federal government, the leading economic research institutes, the Federal Statistical Office, the Bundesbank, the Bundesbank, the Council of Experts to assess the overall economic development in Germany as well as representatives of the state finance ministries and the municipalities.