Friday, September 20 07:33:50
Germany's tax revenues fell for the first time since May 2012 in August, the finance ministry said today, projecting that economic growth has slowed in the current quarter.
The ministry said in a statement two days before national elections that the tax take dropped 2.4 percent on the year to 40.25 billion euros last month, blaming one-off effects including higher contributions to the European Union.
However, in line with other forecasters, the ministry said growth was probably slower in July-September than in the second quarter when the economy bounced back from a weak winter.
"The German economy is continuing to recover," it said. "But in the current quarter the increase in overall economic activity will likely be less than in the second quarter, which was higher due to weather-related catch-up effects."
The economy grew 0.7 percent between April and June thanks largely to robust domestic demand, after contracting late last year and a subdued start to 2013.
Along with strong private consumption, high employment levels have boosted government finances and again helped to push income tax revenue up by 3.5 percent in August. However, a 15.8 percent increase in contributions to the EU and a rise in rebates on corporate taxes dragged overall revenues down.
The conservatives of Chancellor Angela Merkel are banking on the relative economic strength to win re-election on Sunday. Their campaign posters feature slogans such as "solid finances", "strong economy", "secure jobs" and "more for families".
The main opposition Social Democrats and Greens have campaigned for higher taxes for the wealthy while Merkel has ruled out raising them if she holds on to power.
The conservatives have attacked the opposition plans because tax revenues rose to their highest ever level last year and had continued to climb in 2013 until August. They say increases would hurt the economy and therefore the tax take.
Rising revenues have helped Germany to consolidate its budget. If re-elected, Merkel's government aims to use the high tax income to achieve a balanced budget for the first time in decades in 2014.
Between January and August the tax take was 2.6 percent higher than in the same period last year, the report showed.
Recent economic data has been largely positive, especially forward-looking sentiment surveys, although industrial and trade figures for July were downbeat. ( C ) Reuters