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Germany awash in tax money

September 21, 2012

Ongoing growth in Germany's economy has washed a record sum of tax money into state coffers this year. Rising wages in the course of the year have led to the August tax revenue beating all expectations.

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Image: Fotolia/Franz Pfluegl

In August, German tax authorities reported 41.3 billion euros ($53.6 billion) more in tax revenue than in the same month a year ago - a rise by 12.8 percent, according to figures released by the Finance Ministry on Friday.

The August result added to rising tax income for the German state in the first eight months of 2012, which was 5.8 percent higher compared with the same period in 2011, beating a recent state tax estimate for a rise of about 4.0 percent.

From January through August, Germany's central and regional governments earned a total of 352.6 billion euros in taxes.

In a statement, the Finance Ministry noted that tax income was developing "in line" with upward developments in the German economy.

"Apart from steady employment numbers, rising wages have contributed to higher tax income in the past few months," the statement added.

The rise in August came about as income tax revenue rose by about 12 billion euros - up 11.1 percent on the year - and because of an increase of 16.7 billion euros in earnings from Value Added Tax (VAT), which was 4.1 percent more. 

However, the Finance Ministry said it expected the German economy to slow down in the next few months on the back of sluggish global growth. This would certainly weigh on tax income in due course.

At the same time, the economists at the ministry expressed the hope that private consumption would "continue to support" growth in the second halt of 2012.

uhe/mz (Reuters, dpa)