Corona pushes Bavaria into the tax hole!
The tax leader among the federal states has to reckon with a huge drop in income: This year and next, the Free State is heading for an unprecedented slump in tax income due to the corona crisis.
For 2020 alone, the tax estimate assumes a decrease of around 4.2 billion euros compared to the estimate last autumn!
Bavaria’s Finance Minister Albert Füracker (52, CSU): “The situation remains a great challenge. The latest estimates also show that we can expect a massive decline in tax revenues this year and next. It is becoming apparent that the next few years will be even more difficult than expected. “
Already in May, Bavaria had predicted tax losses of more than ten billion euros by 2022. It is now becoming even clearer that the financial consequences of the pandemic are likely to get much worse.
Bavaria is by no means alone with the poor tax forecast. The Federal Ministry of Finance announced on Thursday in Berlin that the federal, state and local governments will have to manage with 19.6 billion euros less tax income than expected in May in 2021 alone.
For Bavaria, which has been the number one tax revenue among the federal states for many years, it is historically the worst tax estimate.
For comparison: After the outbreak of the financial crisis, the estimated drop in revenue between autumn 2008 and May 2009 amounted to around 1.5 billion euros.
At least this year, the holes in the state budget and the billion-dollar aid programs due to the Corona crisis should be compensated for with new debts. The state parliament approved a debt of up to 20 billion euros this year.
It is unclear whether Bavaria, like the federal government, will have to suspend the debt brake anchored in the constitution in the coming year due to the poor forecast.
After the government around Prime Minister Markus Söder (53, CSU) has been advocating an offensive investment policy since the beginning of the crisis and rejecting a rigid austerity course, also out of concern about the consequences for the economy, the next double budget should not be able to cope without new debts.
The Free State benefits from the fact that it enjoys a high reputation with lenders and therefore receives very good conditions for money lending on the financial market. Just a few days ago, the rating agency “Standard & Poor’s” had again certified Bavaria with the top rating “AAA / A-1 +” with a stable outlook. It is the only state with the highest rating.
The reasons for this are Bavaria’s considerable reserves, the great economic power and the comparatively low debt in relation to the number of inhabitants. At the end of 2019, Bavaria was in the chalk with donors with around 27 billion euros.
The tax assessment working group actually meets twice a year, in spring and autumn. Because the effects of the corona pandemic were still difficult to assess in spring, this extraordinary meeting was postponed for September. This should make it easier to plan the budget for the coming years. Bavaria’s state government has to submit the double budget for the next two years to the state parliament for a decision this year.