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21 October 2019

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

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

Federal budget trends up to and including September 2019

Table: Trends in the federal budget

 

Actual 2018 2019 target Actual1 September 2019

Expenditure (€bn)2

336.7

356.4

256.4

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

 

 

+3.7

Revenue (€bn)3

347.6

350.6

255.7

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

 

 

+0.9

Tax revenue (€bn)

322.4

325.5

234.8

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

 

 

+0.2

Balance of pass-through funds(€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

10.9

-5.8

-0.7

Financing/use of surplus

-10.9

5.8

0.7

Cash resources (€bn)

-

-

57.9

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

-57.4

Revenue

Federal revenue for the period from January to September 2019 totalled approximately €255.7bn, representing a rise of 0.9% (around €2.3bn) over the same period in 2018.

Tax revenue (including transfers of EU own resources to the EU) increased by 0.2% (approximately €0.4bn) compared with the same period last year. Other revenue was up by 9.9% (roughly €1.9bn) on the year in the January–September period. This increase is attributable mainly to higher revenue from the distance-based commercial vehicle toll (up by about €1.8bn) and an increase in allocations from the Bundesbank’s profits (up by about €0.5bn).

Expenditure

Federal expenditure in the first nine months of 2019 totalled €256.4bn, up by 3.7% (about €9.0bn) over the same period last year. Federal spending is separated into consumption and investment spending.

Consumption spending was up by 3.0% (about €6.8bn) on the year during the January–September period. This figure includes a 4.2% (€6.2bn) year-on-year increase in ongoing grants to “other areas”, which was driven primarily by higher ongoing subsidies to companies (up by 8.1% or €1.6bn) and by higher subsidies to social security funds (up by 3.6% or €3.5bn). In contrast, ongoing grants for pensions and benefits were down slightly on the year, by 1.0%, mainly due to a 2.5% 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 21.2% lower on the year.

Investment spending totalled approximately €22.2bn in the January–September period, representing an increase of 11.3% over the same period last year. This was driven partly by a surge in fixed asset investment, which rose by 15.9% on the year, as well as by an increase in construction spending (up by around €0.3bn) and acquisitions of movable and immovable assets (which increased by approximately €0.6bn). Another factor was the year-on-year increase in expenditure on financial assistance programmes funded by the government, with 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 only started on 1 January 2019.

Fiscal balance

The federal budget recorded a deficit of €0.7bn for the period from January to September 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 September 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 September 2019. This increase was mainly driven by higher receipts from joint taxes. Almost all the important joint taxes posted high year-on-year revenue growth in September, especially value added taxes, assessed income tax and wages tax. Revenue from final withholding tax on interest and capital gains and from corporation tax fell in September in comparison with the same month last year. Yields from taxes that accrue solely to the Federation were up on the year in September. Receipts from taxes accruing to the Länder posted a considerable increase once again, rising by 13.3%.

EU own resources

Transfers of own resources to the EU, including customs duties, totalled approximately €2.6bn in September 2019, a year-on-year increase of 3.9%. 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 3.1% on the year in the first nine months of 2019. Revenue from joint taxes grew by 3.3%. Taxes accruing to the Federation posted an increase of 0.8%, while taxes accruing to the Länder were up by 7.3%.

Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder) rose by 4.8% on the year in September 2019. This increase was driven by a 5.2% 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 – and by higher receipts from taxes accruing to the Federation, which were up by 2.0%. The tax revenue collected by the Länder in September posted a year-on-year increase of 6.4%. This gain was due mainly to higher yields from the share of joint taxes allocated to the Länder, which were up by 6.7% on the year. Moreover, the VAT revenue distribution system was amended in 2019, with a higher percentage of VAT revenue now going to the Länder. Revenue from taxes that accrue only to the Länder was also up on the year in September, by 13.3%. The share of joint taxes allocated to local authorities was up by 7.1% on the year in September.

Joint taxes

Wages tax

Wages tax revenue continued to show positive growth, with gross revenue from this tax increasing by 5.4% on the year in September 2019. This outcome was buoyed by higher employment levels and higher incomes in general compared with the same period last year. In addition, collectively agreed bonuses which were paid for the first time to workers in the metals and electrical industries led to particularly high revenue growth in the previous month. Wages tax levied on some of these payments was not reflected in cash receipts until September. Child benefit payments, which are financed from wages tax receipts, rose by 7.5% 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 5.0% on the year in September 2019. Cumulative cash receipts for the January–September 2019 period were up sharply, by 6.1% on the year.

Corporation tax

Gross receipts from corporation tax posted a small decrease of 0.6% in September, a month when prepayments are due and revenue therefore tends to be high. Prepayments for the current year, already at a very high level, fell slightly. Investment allowance payments now have only a marginal impact on results. On balance, cash receipts from corporation tax dropped by 1.0% in September. Cumulative cash receipts were down by 4.0% on the year for the January-September 2019 period.

Assessed income tax

As with corporation tax, prepayments for assessed income tax are due in September. Gross receipts from assessed income tax were up significantly, by 6.3%, in September 2019 compared with the same period last year. Prepayments were up by more than 6%, which made a particularly strong contribution to the positive revenue trend. At the same time, employee refunds fell slightly, by 1.2%. After subtracting investment allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount, net receipts from assessed income tax were up by 7.0% on the year in September 2019. In cumulative terms, cash receipts from assessed income tax were up by 4.3% on the year in the first nine months of 2019.

Non-assessed taxes on earnings

September 2019 saw a 10.7% year-on-year rise in gross receipts from non-assessed taxes on earnings. After factoring in a 24.1% 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 12.1% in September. 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 September 2019, cash receipts from non-assessed taxes on earnings were up by 0.3% on the year.

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains posted a year-on-year decline of 12.5% in September. In cumulative terms, cash receipts from this tax were down by 32.9% on the year in the first nine 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 9.0% on the year in September 2019. Domestic VAT revenue was up by 13.5%, while receipts from import VAT declined by 3.6% in year-on-year terms. Cumulative cash receipts from value added taxes were up by 3.6% on the year in the period from January to September 2019.

Taxes accruing to the Federation

In September 2019, revenue from taxes accruing solely to the Federation was up by 2.0% on the year. Receipts from solidarity surcharge also climbed by 4.9% on the year, benefiting from growth in revenue from income and corporation tax (which constitutes its tax base). Revenue gains were also posted for energy duty (up by 5.7%), motor vehicle tax (up by 5.4%) and insurance tax (up by 4.8%). In contrast, revenue drops were recorded for aviation tax (-2.3%) and tobacco duty (-14.6%). However, around €300 million in revenue from tobacco duty was not reflected in cash receipts until October, which alters the current results for September. 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 13.3% on the year in September 2019. This increase was mainly due to growth in revenue from real property transfer tax (up by 14.2%) and inheritance tax (up by 16.0%). The yield from fire protection tax was also higher than a year ago, increasing by 6.3%. 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. In September, revenue from beer duty was down by 22.0% on the year. Receipts from betting and lottery tax rose by 15.4% compared with the same period last year.

Borrowing and guarantees

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

 

Authorised

amount

Amount allocated

as of 30 September 2019

Amount allocated

as of 30 September 2018

in €bn

Export credit guarantees

148.0

119.4

120.3

Loans to foreign debtors, foreign direct investment, EIB loans

58.0

43.0

42.8

Financial cooperation projects

28.5

24.9

21.1

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

125.0

104.8

101.1

International financial institutions

80.0

60.1

60.0

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
November 2019 issue October 2019 21 November 2019
December 2019 issue November 2019 20 December 2019
January 2020 issue December 2019 31 January 2020
February 2020 issue January 2020 21 February 2020
March 2020 issue February 2020 20 March 2020
April 2020 issue March 2020 21 April 2020
May 2020 issue April 2020 22 May 2020
June 2020 issue May 2020 19 June 2020
July 2020 issue June 2020 21 July 2020
August 2020 issue July 2020 20 August 2020
September 2020 issue August 2020 22 September 2020
October 2020 issue September 2020 22 October 2020
November 2020 issue October 2020 20 November 2020
December 2020 issue November 2020 22 December 2020
Key dates on the fiscal and economic policy agenda

1 November 2019

German-Indian intergovernmental consultations in New Delhi

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

20–21 January 2020

Eurogroup and ECOFIN Council meetings in Brussels

17–18 February 2020

Eurogroup and ECOFIN Council meetings in Brussels