Thuringia's tax power: municipalities are struggling with falling income!

Thuringia's tax power: municipalities are struggling with falling income!

The tax capacity in Thuringia experienced a slight decline in 2022. A total of around 2.16 billion euros in tax revenue was generated in the state's approximately 600 municipalities, which corresponds to 1,025 euros per resident. These figures were announced by the Süddeutsche Zeitung. While the assessment rates for property and trade tax hardly changed - property tax from 439 to 440 percent and trade tax from 413 to 414 percent - the total income from trade tax was 1.07 billion euros and income from property taxes of 255 million euros was 55 million euros or 4 percent lower than in the previous year.

On the other hand, revenue from the municipal share of income tax increased by 38 million euros to 750 million euros. Sales revenue also increased by 1 million euros to 173 million euros. There are differences in tax capacity between independent cities and municipalities belonging to the district; While the independent cities have an average of 1,082 euros per resident, the municipalities belonging to the districts only have 1,006 euros.

Tax increases in the first half of 2023

But there is a trend: In the first half of 2023, 36 municipalities in Thuringia have already increased their taxes. This measure not only affects the trade tax, where 26 municipalities recorded an increase, but also property taxes A and B. Many municipalities use the increases to increase their income and expand their financial scope, which is crucial for local coffers n-tv reports. Companies in particular will be burdened with higher taxes, which is seen as a necessary measure in the current economic situation.

The municipalities that adjusted their assessment rates - some for just one type of tax, others for two or even all real tax rates - have recognized that their revenues are at stake. These increases are necessary in order to overcome the long-term financial challenges resulting, among other things, from demographic developments. A clear imbalance is also evident in tax revenues between the different regions, as a study by Antenne Thüringen makes clear.

Low tax revenues and their effects

Another point that affects the situation of Thuringia's municipalities is their dependence on federal and state funding. According to the Bertelsmann Foundation's 2023 municipal financial report, municipalities ended 2022 with a surplus of around 370 million euros. Nevertheless, Thuringia's tax revenues remain very low compared to other federal states. The average level per inhabitant is only half of the comparable value in Hesse. While the Kyffhäuser district and the Altenburger Land are considered to be the financially weakest municipalities in Germany, it is the city of Jena in particular that is above average in a nationwide comparison.

Despite the overview of positive developments such as a surplus for twelve years or the increase in municipal investments to close to the previous year's high, the investment backlog continues to grow. As a result, sustainability tasks, such as the maintenance of water supply systems or green spaces, are increasingly being pushed into the background.