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The German Institute for Economic Research (DIW) anticipates a budget surplus in Germany in both 2013 and 2014, due to "the good revenue situation."
In its Spring 2013 forecast, the institute explains that the positive economic climate in Germany is reflected in the country's public finances. Tax revenues are expanding, primarily as a result of the "robust labor market situation," the institute claims. According to DIW, income from wage taxes alone is set to rise year-on-year by 6% in 2013 and 2014. A budget surplus of around 0.1% of gross domestic product (GDP) is expected in 2013, rising to 0.4% of GDP in 2014.
Despite the fact that employee pension insurance contributions fell from 19.6% to 18.9% at the beginning of the year, income from social contributions is "expanding strongly," DIW maintains. A social fund surplus of EUR50bn (USD65.5bn) is anticipated by 2017.
Concluding, DIW highlights the fact that the positive revenue situation over the coming years will create significant fiscal scope for the Government. It seems clear that there is room for further tax cuts to be implemented, and it is apparent that there is no need for tax rises, as advocated by Opposition parties.
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