BERLIN (MNI) – German tax revenue growth moderated in April, but
the result was distorted to the downside by significantly higher
transfers to the EU, the Finance Ministry said in its monthly report
released late Wednesday.

Total tax revenue (excluding local taxes) in April was 4.4% higher
on the year, down from +7.2% in March. Results for the January-April
period showed a 5.7% annual increase. For the full year, the
government’s forecast is for tax revenue growth of 4.0%.

Federal tax revenue in April grew by 1.1% on the year, as in March.
In the first four months of the year, the annual increase was 3.1%. For
the full year, the government expects a 1.7% increase.

Federal revenue — tax intake plus other income — was up 1.5% on
the year in the January-April period, while expenditures fell 0.7%.

The Bundesbank said earlier today that federal net new borrowing
this year would likely be significantly below the E34.8 billion
projected by the government. Federal tax revenue should be higher than
forecast in the budget, while unemployment-related spending and interest
rate payments might be lower, the central bank argued.

In the economic section of its report, the ministry said the wage
deals agreed in Germany so far this year “are currently no inflation
risk.”

The IG Metall metal-working and engineering trade union and the
Suedwestmetall employers’ association reached a pay deal on Saturday for
the southwestern state of Baden-Wuerttemberg which should be a model
for the 3.6 million employees in the sector nationwide.

Under the retroactive deal, the employees get no pay rise for the
month of April. From May 1 they get a marked pay hike of 4.3%. The
contract has a duration of 13 months. The previous contract expired on
March 31.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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