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20 September 2019

Overview of fed­er­al bud­getary and fi­nan­cial da­ta up to and in­clud­ing Au­gust 2019

Translated extracts from the Federal Ministry of Finance’s September 2019 monthly report.

Federal budget trends up to and including August 2019

Table: Trends in the federal budget

 

Actual 2018 2019 target Actual1 August 2019

Expenditure (€bn)2

336.7

356.4

231.0

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

 

 

+4.0

Revenue (€bn)3

347.6

350.6

222.3

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

 

 

+0.4

Tax revenue (€bn)

322.4

325.5

202.7

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

 

 

-0.6

Balance of pass-through funds(€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

10.9

-5.8

-8.7

Financing/use of surplus

-10.9

5.8

8.7

Cash resources (€bn)

-

-

64.6

Seigniorage (€bn)

0.3

0.3

0.2

Movements in reserves4 (€bn)

-11.2

5.5

0.0

Net borrowing5 (€bn)

0.0

0.0

-56.1

Revenue

Federal revenue for the eight-month period from January to August 2019 totalled approximately €222.3bn, up by 0.4% (about €0.9bn) on the year. Tax revenue (including transfers of EU own resources to the EU) declined by 0.6% (about €1.3bn), mainly due to the fact that the Federation transferred approximately €4.9bn more in GNI-based resources to the EU than it did in the same period last year.

Other revenue was up by 12.6% (about €2.2bn) on the year in the January–August period. This increase is attributable mainly to higher revenue from the distance-based commercial vehicle toll (up by about €1.7bn) and an increase in allocations from the Bundesbank’s profits (up by about €0.5bn).

Expenditure

Federal expenditure in the first eight months of 2019 totalled €231.0bn, up by 4.0% (about €8.8bn) over the same period last year. Federal spending is separated into consumption and investment spending.

Consumption spending was up by 3.4% (about €6.9bn) on the year during the January–August period. This figure includes a 4.2% (€5.5bn) year-on-year increase in ongoing grants to “other areas”, which was driven primarily by higher ongoing subsidies to companies (up by 8.0% or €1.4bn) and by higher subsidies to social security funds (up by 3.6% or €3.1bn). In contrast, ongoing grants for pensions and benefits were down slightly on the year by 1.1%, mainly due to a 2.6% decline in spending on basic income support for jobseekers. The rise in consumption spending was also tempered by a decline in interest expenditure, which was 14.1% lower on the year.

Investment spending totalled approximately €19.7bn in the first eight months of the year, an increase of 10.7% over the same period last year. This was driven by a surge in fixed asset investment, which grew by 17.0% on the year, as well as by an increase in construction spending (up by €0.3bn) and acquisitions of movable and immovable assets (up by €0.6bn). Expenditure on financial assistance programmes funded by the government was also up markedly on the year, due in particular to higher spending on programmes to promote digital technology and on a new home ownership-related child benefit. It should be noted, however, that payments of this new child benefit started on 1 January 2019.

Fiscal balance

The federal budget recorded a deficit of €8.7bn for the period from January to August 2019.

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 federal expenditure by function

Trends in federal expenditure by function

Trends in federal expenditure by economic category

Trends in federal expenditure by economic category

Trends in federal revenue

Trends in federal revenue

Tax revenue in August 2019

2019 trends in tax revenue (excluding local authority taxes)1

Total tax revenue (excluding local authority taxes) was up by 5.6% on the year in August 2019. This increase was driven by increases in receipts from joint taxes, especially wages tax. In addition, revenue from non-assessed taxes on earnings posted strong year-on-year growth, most likely due to fluctuations in dividend distribution dates. Year-on-year revenue gains were also recorded for final withholding tax on interest and capital gains and for value added taxes. Receipts from taxes that accrue solely to the Federation remained basically unchanged on the year in August. In contrast, receipts from taxes accruing to the Länder surged by 15.2%; however, this increase had only a minor impact on total tax revenue because the volume of Länder taxes is relatively small.

EU own resources

Transfers of own resources to the EU, including customs duties, totalled approximately €2.7bn in August 2019, a year-on-year increase of 6.4%. Transfers to the EU are based on the planned financial framework for 2019. The overall volume of the 2019 EU budget is higher than that of the 2018 budget. In addition, monthly fluctuations occur over the course of the year based on the EU’s financing needs at any given time.

Cumulative overview of the January-August 2019 period

Total tax receipts were up by 2.7% on the year in the first eight months of 2019. Revenue from joint taxes grew by 2.9%. Taxes accruing to the Federation posted an increase of 0.6%, while taxes accruing to the Länder were up by 6.6%.

Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder ) rose by 3.4% on the year in August 2019. This increase was driven by a 5.0% increase in revenue from the Federation’s share of joint taxes, even though the actual percentage of joint tax revenue that is allocated to the Federation is lower in 2019 than it was in 2018.

The tax revenue taken in by the Länder in August grew by 7.1% on the year. This gain was due mainly to the yield from the share of joint taxes allocated to the Länder , which was up by 7.5% on the year, partly due to the higher percentage of VAT revenue that is going to the Länder in 2019. Revenue from taxes that accrue only to the Länder was also up on the year in August, by 15.2%. The share of joint taxes allocated to local authorities was up by 10.3% on the year in August.

Joint taxes

Wages tax

Wages tax receipts grew at a fast pace in August 2019, with gross revenue posting a 9.4% increase on the year. This outcome was buoyed by higher employment levels and higher incomes in general. In addition, collectively agreed bonuses were paid for the first time in July 2019 to workers in the metals and electrical industries. Wages tax levied on these bonuses was not reflected in cash receipts until a month later, which helps account for the particularly strong growth recorded in August. Child benefit payments, which are financed from wages tax receipts, rose by 8.2% on the year due to an increase in monthly child benefit of €10 per child from July onwards. On balance, cash receipts from wages tax rose by 10.3% on the year in August 2019. Cumulative cash receipts for the January–August 2019 period were up sharply by 6.3% on the year.

Corporation tax

Revenue from corporation tax amounted to approximately €71m in August, generally a low-revenue month for this tax. This was an improvement over the previous August, when receipts totalled €48m. Investment allowance payments now have only a marginal impact on results. Cumulative cash receipts from corporation tax were down by 5.2% on the year for the eight months from January to August 2019.

Assessed income tax

Revenue from assessed income tax in August was generated primarily from assessment activities. Gross receipts from this tax declined to approximately €1.0bn, a drop of 5.9% on the year. At the same time, employee refunds fell slightly by 2.0%. After subtracting investment allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount, total refunds in August 2019 amounted to roughly €0.5bn, up slightly by €31m over the same period last year. In cumulative terms, cash receipts from assessed income tax were up by 3.1% on the year in the first eight months of 2019.

Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings rose by 22.9% on the year in August 2019, following a decline of 39.8% in the previous month. After factoring in the 22.1% decline in refunds paid out by the Federal Central Tax Office, which are financed from this revenue, cash receipts from non-assessed taxes on earnings were up by 28.6% in August. Overall, the trend in revenue from non-assessed taxes on earnings tends to be very volatile over the course of the year due to fluctuations in dividend distribution dates. The cumulative result provides a more solid basis for analysis: over the period from January to August 2019, cash receipts from non-assessed taxes on earnings were down by 0.4% on the year.

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains recorded a year-on-year increase of 15.1% in August. In cumulative terms, however, cash receipts were down by 34.4% on the year in the first eight months of 2019. There are no statistics breaking down this figure into its two components, but it can be assumed that capital gains have so far made a significantly smaller contribution to overall revenue from this tax than they did in 2018.

Value added taxes (VAT)

Receipts from value added taxes were up by 2.2% on the year in August 2019. Domestic VAT revenue was unchanged in year-on-year terms, while receipts from import VAT grew by 8.9%. Cumulative cash receipts from value added taxes were up by 3.0% on the year in the eight-month period from January to July 2019.

Taxes accruing to the Federation

In August 2019, revenue from taxes accruing solely to the Federation was up just slightly on the year by 0.1%. Receipts from solidarity surcharge were up by 10.0% on the year, thanks to growth in revenue from the taxes that make up its tax base (especially wages tax). Receipts from tobacco duty and insurance tax also posted substantial gains, up by 3.7% and 3.4%, respectively. These gains were offset by year-on-year declines in revenue from energy duty (down by 3.5%), electricity duty (down by 4.4%), motor vehicle tax (down by 1.7%) and alcohol duty (down by 12.6%). Trends in revenue from other taxes had only a minor impact on the overall results for taxes accruing to the Federation.

Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were up by 15.2% on the year in August 2019. This increase was mainly due to growth in revenue from real property transfer tax (up by 7.2%) and inheritance tax (up by 43.1%). The yield from fire protection tax was also higher than a year ago, by 0.9%. Receipts from beer duty had been on the decline since February 2019 due to ongoing refunds triggered by the European Court of Justice ruling of 17 May 2018 (C-30/17) on flavoured beer and mixed beverages containing beer. This trend was reversed in August, when beer duty posted a moderate year-on-year gain of 2.2%. Revenue from betting and lottery tax was down by 2.8% on the year in August.

Borrowing and guarantees

Debt trends for the Federation and its special funds (in €m)

 

Authorised

amount

Amount allocated

as of 30 June 2019

Amount allocated

as of 30 June 2018

in €bn

Export credit guarantees

148.0

119.0

118.5

Loans to foreign debtors, foreign direct investment, EIB loans

58.0

44.5

43.0

Financial cooperation projects

28.5

23.5

20.7

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

125.0

105.4

100.8

International financial institutions

80.0

60.1

60.1

Treuhandanstalt successor organisations

1.0

1.0

1.0

Interest compensation guarantees

15.0

15.0

15.0

Calendar

Publication schedule
Monthly report Reporting period Publication date

October 2019 issue

September 2019

21 October 2019

November 2019 issue

October 2019

21 November 2019

December 2019 issue

November 2019

20 December 2019

Key dates on the fiscal and economic policy agenda

9–10 October 2019

Eurogroup and ECOFIN Council meetings in Luxembourg

16 October 2019

Franco-German Council of Ministers in Paris

17–18 October 2019

Meeting of G20 finance ministers and central bank governors in Washington, D.C.

18–20 October 2019

Annual meetings of the IMF and World Bank in Washington, D.C.
7–8 November 2019 Eurogroup and ECOFIN Council meetings in Brussels
19 November 2019 G20 Compact with Africa conference in Berlin
4–5 December 2019 Eurogroup and ECOFIN Council meetings in Brussels