German gov't expects higher tax take, cautious on spending

AP News
Posted: Nov 09, 2017 10:09 AM
German gov't expects higher tax take, cautious on spending

BERLIN (AP) — The German government increased its forecast for tax income on Thursday amid healthy economic growth, but the interim finance minister cautioned that the next administration won't have unlimited room to spend more or cut taxes.

A twice-yearly tax forecast released Thursday predicted a total tax take this year in Europe's biggest economy of 734.2 billion euros ($851.3 billion), followed by 764.3 billion euros next year. That is a bit higher than May's forecast.

The federal government's tax income over the next four years is expected to be about 15 billion euros higher than previously thought, said Peter Altmaier, the acting finance minister. That comes on top of financial wiggle room of some 15 billion euros that was already expected, he said, though he suggested that the actual room for maneuver may be smaller.

Chancellor Angela Merkel is in negotiations to form a new governing coalition after Germany's September election left her seeking a previously untried alliance with the pro-business Free Democrats and the traditionally left-leaning Greens.

Much remains unclear about what spending plans or tax adjustments the prospective partners might agree on, though Merkel's conservatives are keen to preserve the outgoing government's achievement of a balanced budget. Altmaier, Merkel's chief of staff, is running the finance ministry until a new government is formed.

The prospect of more money being available "doesn't mean that all wishes can be fulfilled," he said.

"We have room for maneuver in the coming parliamentary term which some of our partners, particularly in the European Union, envy us, but it is also clear that we must stay within its limits," Altmaier added. "We are an anchor of stability in Europe."

In a separate report Wednesday, the government's independent panel of economic advisers predicted growth of 2 percent this year and 2.2 percent in 2018.