Future Package: repair needed

For decades, in Germany there is a prevalent tactic. This tactic is related to whether the economy was “limping or growled”. With the introduction of the debt ceiling, the fiscal management is committed. From 2016, the federal government may only have a structural deficit to GDP 0.35 percent.

In summer 2010, the federal government had to stand up and put together a “package future”. financeIt provides for the years 2011 to 2014 cost-cutting measures, modest reductions in tax breaks, and substantial tax increases in the form of new taxes. The volume for the whole period of just under 80 billion euros, without the savings in interest payments this is just under 75 billion euros. Here, the federal government also relieved at the cost of public pensions. For the state (in a consolidated view) it includes the “Future Package” around 71 billion euros.

Parts of the package have been implemented. An aviation tax and a tax on nuclear fuel, they were introduced, and transfers parental benefits were reduced slightly. In many ways, it is good, but let us look in more detail. A financial transaction tax was 6 billion euros. moneyIt is not inserted, but is still planned.

The nuclear fuel tax probably will be in another amounting instead the desired 9.2 billion. For the planned reform are used much smaller savings than provided funds (4 billion euros). The savings from the Federal Employment Agency and the unemployment benefits are also below target fail (20.5 billion euros). The personnel and operating expenses of the targeted savings effect will also not be reached.

At present, it looks as if the public finances from 2011 to 2014 by the “Future Package” relieved to only 37 billion euros. It is even planned to increase the Christmas bonus for federal officials, which will cost 0.5 billion euros per year. The total discharge would then shrink to 35.5 billion euros and thus amount to about 50 percent of the summer of 2010 announced discharge volume.

The prospects for the federal budget are still low. Tax revenues fall since the summer of 2010. The labour market also is performing better than anticipated. There is a good chance that the federal government in 2016 to meet the requirement of the debt brake.