BERLIN (AP) — The German government’s tax revenue is likely to sink by 81.5 billion euros ($88.4 billion) this year as a result of the coronavirus crisis, the first drop since the financial crisis a decade ago, according to an official estimate released Thursday.
A twice-yearly assessment by tax experts, released by the finance ministry, showed that federal, state and local authorities are expected to take in 717.8 billion euros this year, down from 799.3 billion euros in 2019. The previous forecast for this year, made in November, was for an increase to 816.4 billion euros.
The new assessment foresees Germany’s tax take recovering to 792.5 billion euros in 2021 and 816 billion euros in 2022.
The crisis already has derailed the German government’s dedication to keeping its budget balanced, long a point of pride. After six years in the black, it is borrowing 156 billion euros to finance rescue packages and cover the expected shortfall in tax revenue.
Germany is offering a total of more than 1 trillion euros in aid via various packages, which include money to tide small companies and individual entrepreneurs through virus-related closures and to pump capital into bigger companies where needed. The country has Europe’s biggest economy.
Finance Minister Olaf Scholz, who characterized the crisis as “a natural disaster,” said the government will put together a stimulus package in early June.
“That is exactly the right time. Most of the lockdown measures expire at the end of May — not all, but most of them,” Scholz said, indicating that it’s only possible at that stage to assess what is needed. He said he hopes that the measures will be “transformative,” making a contribution to modernizing the economy and Germany’s digital infrastructure, and to combating climate change.
Germany started loosening coronavirus restrictions on April 20, about a month after they were introduced, and the easing has gathered pace over the past week. On Wednesday, Chancellor Angela Merkel said that “as of today, no increases in levies or taxes are planned” to tackle the costs of the crisis, but made clear that she can’t foresee the future.