Tax Forecast: Higher Revenue in Saxony, but Pressure Remains

Saxony can expect slightly higher tax revenues than initially anticipated. “For the Saxon budget, however, this provides only slight relief. Our financial challenges remain significant,” said Finance Minister Christian Piwarz (CDU).

Accordingly, the Saxon budget can expect tax revenue of 20.3 billion euros this year—34 million euros more than initially forecast. In 2027 and 2028, the total is expected to be 312 million euros more than was anticipated in May. 

“The tax estimate creates some additional leeway in the current budget process. However, it does nothing to change the high structural need for consolidation,” said Piwarz. The key, he added, is to consistently allocate funds where they will enable sustainable economic growth.

Overall, however, the German economy has performed slightly better than expected in the spring. “This is good news, which is also reflected in tax revenues. Fortunately, Saxony’s municipalities in particular are benefiting from this,” Piwarz emphasized.

Local Tax Revenues Significantly Higher Than Expected

For local governments, previous expectations in the current tax estimate have been revised significantly upward, as trade tax revenues in the Free State of Saxony have recently performed considerably better than the national average, the report continued. Accordingly, revenues of 5.1 to 5.5 billion euros are forecast for this year and each of the next two years—a total of 526 million euros more than expected as recently as May.