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23 February 2017

Febru­ary 2017 month­ly re­port

Translated abstract of the Federal Ministry of Finance's February 2017 monthly report

Federal budget trends up to and including January 2017

Trends in the federal budget

 

Actual 20161

Estimated

2017

Actual2 as of
January 2017

Expenditure (€bn)3

306.7329.139.1

Year-on-year change in % (year to date)

+0.9
Revenue (€bn)3316.8322.125.4

Year-on-year change in % (year to date)

+14.8
Tax revenue (€bn)289.0301.023.6

Year-on-year change in % (year to date)

+16.5

Fiscal balance (€bn)

10.11-7.0-13.7

Financing/use of surplus:

-44.57.013.7

Cash resources (€bn)

--17.1

Revenue from coin (€bn)

0.30.3-0,1

Transfer to reserve funds (€bn)

-46.70.0
Net borrowing/current financial market balance5 (€bn)0.00.0-3.3
1 Federal revenue, expenditure and net borrowing are based on the current state of the accounts. They are therefore provisional and do not reflect the figures in the government draft of the 2016 Supplementary Budget Act, among other things. The surplus amounts to approx. €6.2bn if higher expenditure on basic income support for older people and for people with reduced earning capacity (+€0.8bn) and allocations to the special fund for promoting investment by local authorities (+€3.5bn) are taken into account and seigniorage (+€0.3bn) is included.
2 As per accounts.
3 Excluding revenue and expenditure from internal offsetting.
4 Changes in reserves can only be calculated following the final closure of the budget.
5 (-) debt repayment; (+) borrowing

Revenue trends

Federal revenue for January 2017 was up by 14.8% (3.3bn) over the same period last year, totalling €25.4bn. Tax revenue, which accounts for the largest share of total revenue, was up by 16.5%. At €1.8bn, other revenue was only slightly below the January 2017 figure.

Trends in federal revenue

Actual

2016

Estimated

2017

Actual

Year‑on‑year
change in %
(year to date)

January 2016

January 2017

€m

Share
in %

€m

Share

in %

€m

I. Tax revenue

288,99191.2301,02993.520,28123,625+16.5

Federal share of joint taxes:

235,74774.4246,46976.516,09616,543+2.8

Revenue from personal and corporate income taxes (incl. final withholding tax on interest and capital gains)

127,46340.2130,18740.46,9517,036+1.2

of which:

   

Wages tax

78,51924.882,93925.84,7525,262+10.7

Assessed income tax

22,8797.223,0267.1436414 -5.0

Non-assessed taxes on earnings

9,7313.19,6103.0538695+29.2

Final withholding tax on interest and capital gains

2,6130.82,3060.7558505 -9.5

Corporation tax

13,7214.313,2494.1668159 -76.2

Value added taxes (VAT)

106,52933.6114,43635.59,1419,459+3.5

Trade tax apportionment

1,7550.61,8460.6548+860.0

Energy duty

40,09112.739,79612.4241277+14.9

Tobacco duty

14,1864.514,7004.6556432 -22.3

Solidarity surcharge

16,8555.317,4505.41,1051,129+2.2

Insurance tax

12,7634.013,0504.11,2131,361+12.2

Electricity duty

6,5692.16,5302.0588526 -10.5

Motor vehicle tax

8,9522.88,9002.8921883 -4.1

Nuclear fuel tax

4220.100.000X

Spirits duties

2,0720.72,0510.6195214+9.7

Coffee duty

1,0400.31,0500.310896 -11.1

Aviation tax

1,0740.31,1010.33840+5.3

Supplementary grants to Länder

-9,845-3.1-9,228-2.900X

EU GNI own resources

-19,911-6.3-21,680-6.71672,991+1.691.0

EU VAT own resources

-4,250-1.3-2,440-0.8-354-197 -44.4

Grants to Länder for public transport

-8,200-2.6-8,144-2.5-617-696+12.8

Grants to Länder for motor vehicle tax and HGV toll

-8,992-2.8-8,992-2.800X

II. Other revenue

27,8398.821,0216.51,8681,802 -3.5

Revenue from economic activity

6,8472.25,4681.73229 -9.4

Interest revenue

3020.13000.11815 -16.7

Loan repayments, holdings, privatisation revenue

2,8900.91,8000.64027 -32.5

Total revenue1

316,829100.0322,051100.022,14925,427+14.8
1 Excluding revenue from internal offsetting.
Source: Federal Ministry of Finance.

Expenditure trends

Federal expenditure for January 2017 amounted to €39.1bn, up by 0.9% (€0.4bn) over the same period a year ago.

Federal spending is separated into investment and consumption expenditure. Driven mainly by human resources spending, consumption expenditure in January 2017 was up by 1.2% over last year. Consumption expenditure was tempered by lower interest payments, however, which were down by 12.0% from last year. Investment spending was down by 2.1% on the year during the same period, although fixed asset investment rose at an above-average pace, up by 20.5% on the year.

Trends in federal expenditure by function

Actual1

2016

Estimated

2017

Actual

Year‑on‑year

change in %
(year to date)

January 2016

January 2017

m

Share

in %

€m

Share

in %

€m

General public servic

72,181 23.577,807 23.66,9707,147+2.5

Economic cooperation and development

7,732 2.58,501 2.61,1221,181+5.3

Defence

34,613 11.336,620 11.13,3653,279 -2.6

Government, central administration

14,580 4.816,326 5.01,4991,591+6.1

Revenue administration

4,507 1.54,560 1.4318348+9.2

Education, science, research, cultural affairs

21,472 7.023,935 7.31,4271,526+7.0

Support for school and university students and training programme participants

3,516 1.13,977 1.2437527+20.5

Science, research and development outside of higher education institutions

11,406 3.712,729 3.9508530+4.4

Social security, family youth affairs, labour market policy

160,251 52.2170,486 51.819,23720,270+5.4

Social insurance including unemployment insurance

106,939 34.9111,943 34.015,17015,905+4.8

Labour market policy

34,566 11.337,057 11.32,7152,961+9.0

of which: Unemployment benefit II under Book II of the Social Code

20,349 6.621,000 6.41,8872,006+6.3

Unemployment Benefit II, government housing and heating allowances under Book II of the Social Code

5,384 1.86,500 2.0335419+25.1

Family assistance, welfare services, etc.

8,065 2.68,275 2.5732756+3.3

Social benefits for the consequences of war and political events

2,026 0.72,111 0.6228215 -5.6

Health, environment, sport, recreation

2,074 0.72,324 0.7130178+37.4

Housing, regional planning and local community services

2,427 0.83,324 1.0255345+35.6

Housing, home ownership savings premium

1,866 0.62,378 0.7256343+33.7

Food, agriculture and forestry

900 0.31,250 0.44020 -48.5

Energy and water supply, trade and services

4,252 1.46,039 1.81,3861,173 -15.4

Regional support measures

719 0.21,585 0.5-72X

Mining, manufacturing and construction

1,705 0.61,546 0.51,3081,011 -22.7

Transport and communication

18,313 6.020,818 6.31,1541,387+20.3

Roads

8,660 2.89,154 2.8554615+10.9

Railways and public transport

5,623 1.86,420 2.0281287+2.4

Financial management

25,185 8.223,117 7.08,1567,073 -13.3

Interest expenditure

17,501 5.718,471 5.67,6466,727 -12.0

Total expenditure2

306,739 100.0329,100 100.038,73939,100+0.9
1 Expenditure is based on the current state of the accounts and is therefore provisional.
2 Excluding expenditure from internal offsetting.
Source: Federal Ministry of Finance.
Trends in federal expenditure by economic category

Actual1

2016

Estimated

2017

Actual

Year‑on‑year

change in %
(year to date)

January 2016

January 2017

€m

Share
in %

€m

Share
in %

€m

Consumption expenditure

277,05690.3295,96989.935,55835,986+1.2

Personnel expenditure

30,66510.031,9889.72,9813,404+14.2

Salary payments

22,2697.323,4337.11,9862,367+19.2

Pensions

8,3962.78,5552.69951,037+4.2

Current material expenditure

26,1328.528,9578.81,7601,673 -4.9

Non-personnel expenditure

1,5060.51,5420.57885+9.0

Military procurement

9,9633.211,2583.4763512 -32.9

Other

14,6624.816,1574.99181,076+17.2

Interest expenditure

17,4985.718,4625.67,6466,727 -12.0

Current grants and subsidies

201,99765.9215,72865.623,04624,078+4.5

to public administration

23,3067.626,8248.21,1591,061 -8.5

to other sectors

178,69158.3188,90457.421,88723,018+5.2

including:

  

Private enterprises

26,8788.830,0449.13,0842,930 -5.0

Pensions, assistance etc.

28,9579.429,8939.12,7612,896+4.9

Social insurance funds

112,57736.7116,87835.515,48916,213+4.7

Other asset transfers

7640.28340.3126104 -17.5

Investment expenditure

29,6839.736,07111.03,1813,114 -2.1

Financial assistance

20,8586.826,0357.92,8772,749 -4.4

Grants and subsidies

19,2876.322,6396.92,5622,566+0.2

Loans, guarantees

1,0690.31,9270.63870+84.2

Acquisition of holdings; capital contributions

5010.21,4690.4278113 -59.4

Fixed asset investment

8,8252.910,0373.0303365+20.5

Construction measures

6,8462.27,5332.3182234+28.6

Acquisition of movable assets

1,4800.51,8460.697106+9.3

Acquisition of real property

4990.26580.22526+4.0

General reduction/increase in expenditure

00.0-2,940-0.900X

Total expenditure2

306,739100.0329,100100.038,73939,100+0.9
1 Expenditure is based on the current state of the accounts and is therefore provisional.
2 Excluding expenditure from internal offsetting.
Source: Federal Ministry of Finance.

Fiscal balance

The fiscal balance stood at –€13.7bn for January 2017. In other words, expenditure exceeded revenue by this amount.

Revenue and expenditure are subject to strong fluctuations over the course of the fiscal year and thus have an uneven effect on cash funds in individual months. Net borrowing also tends to fluctuate considerably over the course of the year. This means that the fiscal balance at this point in the year and the corresponding net borrowing figures are not reliable indicators of the end-of-year figures for the fiscal balance and net borrowing.

Trends in general government tax revenue

Current-year trends in tax revenue (excluding local authority taxes)1

2017

January

Year‑on‑year
change

January

to

January

Year‑on‑year
change

2017 estimates4

Year‑on‑year
change

in €m

in %

in €m

in %

in €m

in %

Joint taxes

      

Wages tax2

16,435+8.716,435+8.7195,150+5.6

Assessed income tax

977 -5.0977 -5.054,500+1.2

Non-assessed taxes on earnings

1,481+30.11,481+30.119,220 -1.2

Final withholding tax on interest and capital gains

1,148 -9.51,148 -9.55,240 -11.8

Corporation tax

318 -76.2318 -76.226,750 -2.5

Value added taxes (VAT)

18,771+5.518,771+5.5226,650+4.4

Trade tax apportionment

63X63X4,456+5.2

Increased trade tax apportionment

144+514.5144+514.53,664+1.9

Total joint taxes

39,337+4.439,337+4.4535,630+3.7

Federal taxes

Energy duty

277+14.8277+14.840,000 -0.2

Tobacco duty

432 -22.3432 -22.314,700+3.6

Spirits duty incl. alcopops duty

214+9.9214+9.92,050 -1.0

Insurance tax

1,361+12.21,361+12.213,050+2.2

Electricity duty

526 -10.6526 -10.66,530 -0.6

Motor vehicle tax

883 -4.1883 -4.18,900 -0.6

Aviation tax

40+4.640+4.61,106+3.0

Nuclear fuel duty

0X0X0X

Solidarity surcharge

1,129+2.21,129+2.217,450+3.5

Other federal taxes

123 -7.3123 -7.31,467+0.6

Total federal taxes

4,984 -0.14,984 -0.1105,253+0.8

Länder taxes

Inheritance tax

521+12.6521+12.65,307 -24.3

Real property transfer tax

1,106+4.11,106+4.112,958+4.4

Betting and lottery tax

192+27.3192+27.31,850+2.3

Beer duty

54 -8.754 -8.7667 -1.6

Other Länder taxes

20+4.820+4.8453+2.6

Total Länder taxes

1,892+7.91,892+7.921,235 -5.0

EU own resources

Customs duty

362 -6.2362 -6.25,300+3.7

VAT-based own resources

197 -44.4197 -44.42,440 -42.6

GNI-based own resources

-2,991X-2,991X21,680+8.9

Total EU own resources

-2,431X-2,431X29,420+0.5

Federation3

23,940+17.023,940+17.0305,606+5.7

Länder3

21,813+4.921,813+4.9288,292 -0.1

EU

-2,431X-2,431X29,420+0.5

Local authorities’ share of income tax and value added tax

3,255+9.53,255+9.544,100+6.7

Total tax revenue (excluding local authority taxes)

46,576+4.046,576+4.0667,418+2.9
1 Methodology: Total cash income from the various taxes is recorded and allocated to the various government levels as stipulated by law. Actual tax amounts collected in the current month by individual government levels may differ from target amounts due to technical reasons.
2 After deduction of child benefit refunds by the Federal Central Tax Office. 3 After supplementary grants; any discrepancies with table on federal revenue are due to methodology used. 4 Source: Working Party on Tax Revenue Estimates, November 2016.

Tax revenue in January 2017

Total tax revenue (excluding local authority taxes) posted another robust year-on-year gain in January 2017, up by 4.0%. Receipts from joint taxes, which were up by 4.4% over last year, made a particularly strong contribution to this development. Joint tax receipts received a boost from an increase in revenue from wages tax (which was, however, mainly the result of a baseline effect) and also from a sharp increase in receipts from VAT. Non-assessed taxes on earnings also saw a sharp rise. Corporation tax fell sharply in year-on-year terms, from a high baseline figure in the same period of the previous year. Receipts from federal taxes in January were nearly exactly at the same level as last year. Revenue from Länder taxes again recorded a big gain (7.9%).

EU own resources

Following the EU settlement process for payments from previous years, approximately €4.7bn in GNI-based own resources were refunded to the Federation in January 2017. The Federation transferred approximately €1.7bn in GNI payments to the EU for 2017. Factoring in VAT own resources and customs duties, the balance for EU own resources stood at –€2.4bn in January 2017, representing payments of that amount from the Federation to the EU. Transfers to the EU were based on the planned financial framework for 2017, with fluctuations over the course of the year, depending on the financing needs at the given times.

Distribution among the Federation, Länder and local authorities

In purely numerical terms, the Federation’s tax receipts in January 2017 (after accounting for supplementary federal grants to the Länder) rose by 17.0% over last year. As described above, this sharp rise in federal tax receipts is due to the one-time refund of €4.7bn related to own resources payments to the EU. In addition, the Federation’s share of revenue from joint taxes increased by 3.0%.

As a result of a new law, which came into force in December 2016 and required the Federation to contribute to refugee-related costs as of 2016, the Federation provided the Länder with a considerable share of its VAT receipts in 2016. Factoring in the effects of the new law , the Federation’s share of VAT revenue in 2017 was up slightly compared with 2016. The 2016 payment, however, was only made in December 2016. The Federation’s share of VAT receipts in January 2017 was therefore down by approximately 0.9 percentage points over January 2016, while the share accruing to the Länder and to the local authorities was up over last year (by 0.4 and 0.5 percentage points, respectively). Thanks to the increased share of VAT revenue for the Länder and the 7.9% rise in receipts from taxes accruing to the Länder, Länder tax revenue for January 2017 was up by 4.9% over January 2016. Local authorities’ share of receipts from VAT and joint taxes were up 27.0% and 9.5% respectively over January 2016.

Joint taxes

Wages tax

Revenue from wages tax again recorded growth in January 2017, with gross revenue from this tax increasing by 7.8% on the year. This rate of growth is exaggerated, however, since the reference value for January 2016 was significantly lower than it would otherwise have been due to the impact of a change in the law. A 2015 law raising the basic personal allowance, the child tax exemption, child benefit and the child supplement retroactively lowered tax rates for the whole year of 2015, but was implemented only in December 2015, meaning revenues were first affected in January 2016. Without this effect, growth would have been around 3%. The labour market situation remains favourable, and the overall trend is consequently expected to remain positive in the coming months. Overall, this should boost revenue from wages tax. Child benefit payments – which are financed from receipts from wages tax – rose by 3.4% over January 2016. On balance, cash receipts from wages tax were up by 8.7% in year-on-year terms in January 2017.

Corporation tax

Fluctuations related to assessment activities and revenue increases resulting from audits led to a strong increase in revenue from corporation tax in January 2016. For January 2017, revenue was closer to average, which explains the strong fall in revenue of –76.0% compared with 2016. After deducting investment allowance payments, which are continuing to decline in terms of volume, cash receipts from corporate tax stood at €0.3bn for January 2017. However, a high volume of refunds is still expected for 2017 due to high court rulings which have not yet had an impact on revenue (Federal Fiscal Court rulings on the STEKO case and section 40 of the Capital Investment Companies Act).

Assessed income tax

Gross revenue from assessed income tax was down by 5.2% over January 2016. Despite this slight year-on-year decline, revenue in January 2017 remained at healthy levels. On balance, cash receipts from assessed income tax stood at approximately €1.0bn in January 2017 (down by 5.0% compared with January 2016), after subtracting employee refunds, investment allowance payments and owner-occupied homes premiums.

Non-assessed taxes on earnings

January 2017 saw year-on-year growth of 20.1% in gross receipts from non-assessed taxes on earnings. After deducting refunds by the Federal Central Tax Office, which are financed from this revenue, and which were down by 20.3%, cash receipts from non-assessed taxes on earnings grew by 30.1% in January 2017.

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains fell by 9.5% on the year in January. The trend in recent months suggests that revenue from this tax will see something of a stabilisation at a low level. No reliable information on tax revenue from capital gains can be provided since no statistical data on this tax is available.

Value added taxes

After posting weak gains in December, revenue from VAT in January 2017 increased again at a strong year-on-year rate of 5.5%. Receipts from domestic VAT grew by 4.3% in year-on-year terms, while the yield from import VAT climbed by 9.7%.

Taxes accruing to the Federation

In January 2017, revenue from federal taxes was practically at the same level as in January 2016 (–0.1%). Energy duty, an important source of revenue for the Federation, recorded an increase of 14.8% while receipts from insurance tax increased by 12.2%. Other taxes posting revenue gains included spirits duty (+9.9%), aviation tax (+4.6%) and the solidarity surcharge (+2.2%). Year-on-year declines in revenue were recorded for tobacco duty (–22.3%), coffee duty (–11.0%) and electricity duty (–10.6%). Trends in revenue from other taxes had only a minor impact on the overall results for federal taxes.

Taxes accruing to the Länder

Revenue from taxes accruing solely to the Länder rose by 7.9% on the year in January 2017. Inheritance tax receipts were up by 12.6% on the year. Year-on-year gains were also recorded for real property transfer tax (+4.1%). Receipts from betting and lottery tax rose by 27.3% compared with the same period in 2016, while beer duty revenue fell by 8.7% on the year.

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