Coronavirus to slash almost €100 billion off Germany's 2020 tax intake

AFP - [email protected] • 14 May, 2020 Updated Thu 14 May 2020 16:00 CEST
image alt text

Germany expects the coronavirus pandemic to wipe almost €100 billion off the 2020 tax intake, according to latest estimates Thursday from the finance ministry.

"In comparison with the tax estimate from October 2019, tax intake for 2020 will be €98.6 billion less than expected," the ministry estimate said.

Tax revenues for 2021 through to 2024 are also due to fall way short of earlier forecasts, with the figure for next year to be down €52.7 billion.

READ ALSO: Germany braces for 'worst recession' in post-war history

That "is only a snapshot, the future course of the pandemic can not be forecast yet," warned Finance Minister Olaf Scholz.

Unprecedented stay-at-home measures imposed by governments worldwide to halt transmission of the coronavirus have had a devastating impact on the global economy.

As huge swathes of the population are forced to stay away from work and as trade and travel are severely curtailed, Europe's biggest economy has not been spared.

Germany has already slipped into a recession, and the economy is expected to shrink by 6.3 percent for the full year -- the biggest contraction since 1949.

Dire straits

To help cushion the blow for companies and workers, German Chancellor Angela Merkel's government has unveiled a massive rescue package worth over €1 trillion.

It includes state-backed loan guarantees, direct cash injections and schemes to put workers on reduced hours to avoid layoffs.

With new infection numbers falling, Germany has begun reopening shops, schools and restaurants over the last week.

READ ALSO: Here's Germany's plan for post-lockdown life with the coronavirus

But international demand remains muted, a tough blow for export-reliant Germany.

Its automotive industry, a pillar of the economy, is in dire straits -- latest numbers indicate that car production has plummeted.

In an illustration of the tough times ahead, Volkswagen, which recently restarted production, has had wind down activity almost immediately again because of poor demand.

Aviation giant Lufthansa is also in talks with the government for a huge rescue package that may involve a partial nationalisation of the group to stave off bankruptcy.

The airline's chief executive Carsten Spohr has said that group was losing about "a million in liquidity reserves per hour".

READ ALSO: Germany's Lufthansa to ramp up European flights in June

Underlining the unprecedented nature of the economic storm, Scholz said this was not time to talk about tightening the belt, as he reiterated that the government will not baulk at throwing resources at countering the crisis.

"We don't need to save against the crisis and we don't want to do that," he stressed, saying that the government will push on with plans to unveil in early June a package of measures to jumpstart the economy.



AFP 2020/05/14 16:00

Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.

Please log in to leave a comment.

See Also