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The economic impact of the coronavirus crisis means Germany can expect €81 billion less in tax income this year than predicted. The finance minister said he is confident they can "bazooka" the economy back to life.
Tax revenues in Germany will drop by €81.5 billion ($88 billion) in 2020 because of the effects of the coronavirus crisis, German Finance Minister Olaf Scholz said on Thursday. This is more than 10% less than in 2019.
This is the first time since the 2009 financial crisis that the amount of money flowing into Germany's tax coffers is expected to decrease.
The decrease in tax income means that — if the country chooses not to take on new debt — German services on federal, state and local levels will have €98.6 billion less to spend this year than was predicted in November 2019.
Scholz said the effects of the lowered income will be felt in federal budgets until at least fall 2024. Over the course of the next four years, he said that Germany is expecting to have around €315.9 billion available.
Germany 'well-equipped' for less tax income
Despite the gloomy prospects, Scholz stressed that he believes "the government is in a position to deal with the crisis."
"We've got the bazooka out to stabilize our economy," he told reporters in Berlin.
He said the current government's budget policies means they can adapt to the difficult circumstances. He also announced a more detailed economic program to foster growth and greater momentum in the economy will be announced at the beginning of June.
Germany's 16 states must now adapt budgets that were set out in November 2019 for this year.
ed/sms (AFP, dpa, Reuters)