German Tax Revenue Seen Falling Short

BERLIN (AP) — German government tax revenue is expected to fall about euro3 billion ($4.4 billion) short of previous estimates this year, the Finance Ministry said Thursday, but the new governing coalition vowed to press ahead with tax-cutting plans.

Germany's economy, Europe's biggest, is expected to shrink by 5 percent this year and grow by 1.2 percent in 2010. The slowdown has weighed on tax revenue.

A regular meeting of tax experts this week estimated that this year's total tax revenue will be euro524.1 billion ($779.18 billion) — euro2.9 billion ($4.31 billion) less than was forecast in May, and largely a result of changes in tax regulations, the Finance Ministry said.

That would mean a 6.5 percent decline compared with the previous year, a post-World War II record, said Andreas Rees, an economist at UniCredit in Munich.

Next year's total tax take should come in at euro511.5 billion ($760.45 billion), a euro1.1 billion ($1.64 billion) improvement on the previous forecast, the ministry said.

Chancellor Angela Merkel's new center-right government took office last week after agreeing to cut taxes by a total of euro24 billion ($35.68 billion) per year starting in 2011. However, it has left open many details of how it will implement that pledge.