Germany collects more taxes than ever before

By on 02/02/2015 | Updated on 24/09/2020

Taxes collected by the German state reached a record high in 2014, and the trend is set to continue, the finance ministry predicts.

Last year’s total tax revenue was €593bn – 4% higher than the previous year when it was €570.2bn, according to the finance ministry’s monthly report.

A spokesman for the German finance ministry told Global Government Forum that Germany collected more taxes than ever before, because of a rising GDP.

He said: “The bigger the wages, the more income tax people pay. […] Growing wages also mean that people spend more money, so VAT revenue grows as well. This means we collect more taxes without having to increase tax rates, because it all happens automatically.”

This trend, the spokesman added, will continue because – “unless a recession hits, the GDP will keep rising, so our tax revenue will reach record highs every month and every year.”

Germany’s GDP keeps growing, due to high employment rates. In December 2014, Germany recorded the lowest unemployment rate out of all EU member states at 4.8%, according to statistics compiled by the European Commission.

“The more people [that] are employed, the more people pay income tax and social security contributions,” the spokesman said.

Reasons for Germany’s stable labour market situation, he added, are positive developments in the economy – “the industry is able to produce high quality goods which boosts exports” – and reforms to the labour market implemented by Germany’s previous government which was led by chancellor Gerhard Schröder.

Schröder first announced the set of reforms, titled ‘Agenda 2010’, in 2003. The reform plans focused on reductions in health care benefits, restructuring labour regulations, tax cuts and an overhaul of the pension system.

About Winnie Agbonlahor

Winnie is news editor of Global Government Forum. She previously reported for Civil Service World - the trade magazine for senior UK government officials. Originally from Germany, Winnie first came to the UK in 2006 to study a BA in Journalism & Russian at the University of Sheffield. She is bilingual in English and German, and, after spending an academic year abroad in Russia and reporting for the Moscow Times, Winnie also speaks Russian fluently.

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