Germany's federal tax revenue rose 2.6% YoY, economic recovery expected this year.


In the monthly report from the German Ministry of Finance, they revealed that tax revenue in May increased by 2.6% compared to the same period last year.

Germany's federal and regional tax revenue increased by 2.6% year-on-year in May, reaching 61.2 billion euros (approximately 65.77 billion dollars), the Finance Ministry stated on Thursday. This gain was driven by a one-off base effect that boosted federal-level revenue.

Wage tax and the flat-rate withholding tax on interest and capital gains saw an increase, while sales tax and corporate tax revenues were lower compared to the same period last year.

In its monthly report, the Finance Ministry noted that tax revenue of Europe's largest economy grew by 2.8% in the first five months of this year, reaching 322.3 billion euros.

The latest tax estimates show that overall tax revenue for the year will increase by 4.1%, nearly reaching 864 billion euros.

The government is currently discussing the 2025 budget, with many disagreements among the three parties, including Chancellor Olaf Scholz's Social Democratic Party (SPD), the Greens, and Finance Minister Christian Lindner's Free Democratic Party (FDP).

The report also indicated that although some economic indicators stagnated in May, key metrics increasingly point to a moderate recovery for the remainder of the year.



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Deadweight Loss Of Taxation

The deadweight loss of taxation refers to the economic loss that occurs due to market inefficiencies and a decline in resource allocation efficiency during the implementation of taxes.


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