Tax Woes

For a number of weeks, there's been chatter by the German government over costs and tax revenue....during this virus crisis.

About every six months, the government finance folks sit down and do this analytical 'game' where they look at all tax procedures (the sales VAT, cigarette taxes, alcohol taxes, gas taxes, etc).  Inch by inch, they look at the past six month, and then lay out the path.....to a successful tax revenue situation, or a problem tax revenue situation.

This morning....ARD (public TV, Channel One) did a short update on this.

By their estimate, they are about 100 billion 'short' on revenue.....based on the shut-down period, and ban activity.

I sat and read through the piece and the remarkable thing left out is that none of the shutdown or ban business really started until early March.  So it's really two months of slow-down....NOT six months of slow-down.  That's what equals the 100 billion Euro being short.

So if you looked at this and suggested that things were being 'opened-up'....that's not the whole picture.

For example, hotels are not really open, and no one is sure about how this will work out for the rest of 2020.

The travel industry and airline travel?  No one is sure about them, and most people in the government suggest international travel will not start up for the remainder of 2020.

The number of small business operations which fell greatly in this two-month period and probably will go bankrupt?  It's into the thousands across Germany.

I would go and suggest for the remaining seven months of the year, there's probably another 100 billion Euro that the government is missing from tax revenue.

As for 2021?  You can't really speak to it.  Among the other issues, there are those virus experts who suggest that Corona will make a second sweep through Germany in the fall of 2020.  Another massive shutdown?  Don't even bring up that topic.

So don't be surprised about the financial chatter that comes up and about frustrations in balancing the books.

Note: one other side-story on financial woes....circles the German Bahn system (the national railway).  They say their losses are near four to five billion Euro.  So they want the government to dump some cash into their hand as well.