German Minister of Finance Olaf Scholz on Sunday said that the days when the country’s tax revenues consistently overshot expectations were over as Europe’s top economy loses momentum.
“The good times in which the state kept taking in more taxes than expected are coming to an end,” Scholz told the Bild am Sonntag newspaper.
“For 2018, we will once again show a tax surplus, but now the fat years are over. From now on, I don’t expect any more unforeseen additional income,” he added.
Solid economic growth, high wages and record-low unemployment have boosted Germany’s tax take in the past few years, helping the government notch up successive budget surpluses, in marked contrast with most of its EU partners.
The 2017 budget surplus stood at 36.6 billion euros (US$41.85 billion).
Germany’s unemployment rate dropped to 5.2 percent last year, shedding 0.5 percentage points compared with the previous year.
Detlef Scheele, chairman of the Executive Board of the German Federal Employment Agency, on Friday said that “positive economic development” over the past year was a driver of job growth, but added that “the economic upswing has lost some of its momentum.”
Growth in the export-reliant powerhouse has slowed in the past few months in the face of US-China trade tensions, problems in the crucial auto industry and concerns over a hard Brexit.
In the third quarter of last year, the German economy even contracted for the first time in more than three years. The government has since cut its growth forecast for last year to 1.5 to 1.6 percent, down from the 2.2 percent expansion the year earlier.
Germany, which also runs a massive trade surplus with the rest of the world, regularly comes under fire from the US, European peers and international institutions for not spending or investing enough of the proceeds of its wealth.
After taking over from veteran finance chief Wolfgang Schaeuble in March last year, Scholz vowed to stick to his predecessor’s “black zero” policy of not racking up new debt, while striving to lower Germany’s public debt to less than 60 percent of GDP, the EU ceiling.
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