The German Finance Ministry officially lowered its tax revenue estimates for 2002 last week, prompting speculation that the country will have problems meeting an EU deadline of 2004 for bringing its budget close to balance or in surplus.
Blaming poor growth due to the global economic slowdown, problems with the corporate tax regime, and tax fraud, the Finance Ministry on Thursday revised its November 2001 revenue collection estimate down by around 11.7 billion euros.
At 2.7%, the country's deficit is perilously close to the 3.0% ceiling stipulated by the EU Stability Pact, and this new announcement could prove embarrassing for the German government, given Finance Minister Hans Eichel's outspoken criticism of French President, Jacques Chirac on the issue of budget balancing early last week.
However, according to several reports, the German Finance Minister has denied that the projected drop in public sector tax revenues will affect the Government's EU commitment:
'If the widely expected economic recovery sets in, we will meet this goal,' Mr Eichel stated on Thursday. However, he admitted that there is 'no room for extra spending programmes or further measures that limit revenues'.
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