Germany cuts tax estimates to 2029 by more than 80 billion euros

By Maria Martinez

BERLIN (Reuters) -Germany's economic downturn and tax relief are likely to reduce total tax revenues by 81.2 billion euros ($90.94 billion) between 2025 and 2029 compared with a projection in October, figures the country's council of tax experts showed on Thursday.

For the federal government alone, the council forecasts 33.3 billion euros less in tax revenues for the five-year period.

"The results show that we need to strengthen revenues through higher economic growth. Only in this way can we gain financial leeway," German Finance Minister Lars Klingbeil said, as he presented the projections.

Germany was the only member of the G7 advanced economies that failed to grow for the last two years and reviving its sluggish economy will be one of the main tasks of its new government.

Klingbeil said he expected a slight improvement in tax revenues from 2027 onwards.

This year, the federal government is expected to receive 0.6 billion euros less in revenues, while Germany's states are expected to get 1.1 billion euros more and the municipalities receive 3.5 billion euros less compared with the previous forecasts.

Klingbeil, who took office last week, said that by the end of June, the cabinet would approve the 2025 draft budget. It will include tax relief for companies to spur growth and a law to introduce a 500 billion euro infrastructure fund, he said.

After former Chancellor Olaf Scholz's coalition collapsed in November, the government ran out of time to pass the 2025 budget and Germany has had a provisional budget since the start of the year.

Once the draft budget is approved, the cabinet should adopt Germany's draft budget for 2026 in July and discussions on it should start in parliament in September.

For 2026, Germany's council of tax experts forcasts 10.2 billion euros less for the federal government.

($1 = 0.8929 euros)

(Reporting by Maria Martinez, editing by Kirsti Knolle and Barbara Lewis)