German budget: structure, revenues, terms of filling and distribution

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:39

Germany is one of the most influential countries in Western and Central Europe, a major economic power. The state is spread over an area of 357.5 thousand km². The number of inhabitants is 82 million people. The capital of the country is the city of Berlin. Previously, it was divided into Eastern and Western parts, but then it was merged into one. The inhabitants speak German. The country's economy is one of the most advanced in the world, and Germany's budget structure is fairly balanced.

Natural conditions

The country stretches from north to south - from the coasts of the B altic and North Seas to the mountain system of the Alps, part of which belongs to Germany. The largest river is the Rhine.

The climate in Germany is moderately mild, slightly continental, with cool and rather snowy or rainy winters and warm summers. The weather is often changeable, including in summer: warm andsunny can quickly change to cold and rainy. The country is in a zone of increased climate warming. Previously, winters were colder than now, summers are gradually becoming hotter. All this has an ambiguous effect on the economy, which, of course, affects the budget - Germany is one of the initiators of the fight against climate change and is trying to direct its economy towards greater energy efficiency, change the energy structure, the transport sector, etc.

Economy

Germany's GDP is several trillion dollars a year, which is truly a huge amount for such a small state. The standard of living of the population is high, despite the lack of large reserves of natural resources. The country has to buy hydrocarbons. The most convenient option for Germany is to receive gas via a gas pipeline from Russia. Unlike Poland and a number of other EU countries, Germany prioritizes its economic interests over political ones and continues to lobby for the construction of gas pipelines. This is practically the only country in the EU that insists on continuing the construction of the Nord Stream 2 gas pipeline. This is largely due to the implementation of ambitious, but perhaps insufficiently substantiated plans to abandon nuclear generation, while other EU countries are in no hurry to curtail the use of coal and peaceful atom.

Rejection of nuclear and coal energy is not cheap for the country - the price of electricity is rising. The main focus is on the development of renewable energy,which is gradually turning from an expensive pleasure into a relatively inexpensive alternative, especially when it comes to electricity. At the same time, Germany is in no hurry with the development of renewable energy, relying on gas imports from Russia.

The structure of the German economy is typical for developed countries. 2/3 of GDP is provided by the service sector. In second place is industry, while the share of agriculture is very small. And this is despite the fact that most of the territory is favorable for growing food crops and is located on the plain. Highly productive agriculture prevails. The country ranks 1st in milk production among EU countries, and second in grain production. This means that despite the small contribution of agriculture to GDP, the volume of agricultural production is very large.

The basis of Germany's industry is chemical, engineering, electrical, shipbuilding and automotive. Until recently, coal was also developed, but now it has actually come to naught.

The structure of the German state budget

Germany has a three-tier budget system:

• Federal budget.
• Regional (land) budget.
• Community budget (local). There are 11,000 of them in the country.

In addition, there are various off-budget funds.

The entire German budget is divided into revenue and expenditure parts. The revenue part is formed by taxes, which give 4/5 of the budget revenues. Not related to taxesreceipts are the profits of various organizations, rent payments and other types.

The expenditure part of the budget is related to activities at the level of the federation, lands, communities. The share of government spending is about half of the country's GDP. In the 80s and 90s of the twentieth century, it gradually decreased.

An important item of expenditure in Germany is the military sector. The German military budget is about 30% (according to other sources - less than 2%) of the total budget.

Economic spending also matters a lot. They include spending on public utilities, housing construction, transport, industry (mining and processing), communications, and agriculture. The main part of the expenses (90%) is related to the construction of infrastructure.

Much less funds go to education and science - up to 5%. The expenses for management are also low - 3%. Since 2002, the euro has been used as the base currency, before that the German mark was used. The first budget, issued in 2002, had an expenditure side of 247 billion euros.

Role of regions

Lands and communities form almost 100% of public spending on public utilities, he alth and education facilities, more than 80% of total spending on transport services, housing and roads, up to 3/4 of the costs of servicing the state apparatus, more than 40% spending on government debt. An increase in the expenditures of communities and lands is not accompanied by an increase in their income base, so the share of their own incomes is falling, while the share ofsubsidies from a higher rank of the budget system. The mass of debt transactions of regional bodies is increasing, which contributes to the growth of their budget deficit.

Fiscal deficit

The problem of the budget deficit for Germany is quite acute. The fight against it was one of the priorities of the policy of G. Schmidt and G. Kohl. The increase in the deficit was noted after the reunification of Germany in the 90s of the twentieth century.

Draft and adoption of the budget

Budget review begins with the submission of next year's proposals to the Ministry of Finance in the form of cost estimates. The finance minister (who is subordinate to the federal chancellor) prepares the budget plan, which is submitted to the cabinet. The plan is checked, amendments are made, a draft law is formed, which is then submitted for adoption to the relevant government departments.

Initially, the budget draft goes to the Upper House, where it is considered within 3 weeks. After that, he goes to the Lower, which is called the Bundestag. If there are comments, any of these chambers may return the draft for reconsideration. When adopting the German budget, unlike other countries, it is the Lower House that has the right to approve or not approve the budget, while the Upper House only considers and proposes amendments.

The federal government must follow the budget, albeit with some exceptions. In total, the budget adoption process consists of the following stages: drafting, approval, implementation and control overhis move.

The controlling body is the Federal Accounts Chamber.

Revenues

German budget revenues are almost equal to spending. The main source of income is income from taxes, fees and payments. Regional budgets are replenished with excises, transport tax, property tax, tax on gaming establishments, fees and duties. The state budget is replenished by taxation from the profits of enterprises, corporations, turnover tax and from the income of individuals. This does not include customs duties and fees of the European Communities.

Expenditure

60% of the budget goes to social needs. It finances defense, debt servicing, investments in industry, agriculture, infrastructure, the work of the state apparatus, etc. Thus, the German budget expenditures have a social orientation.

Features of the German budget for 2019

Social spending has a significant share in the German budget. In recent years, they have grown especially strongly, due to the allocation of a large amount to ensure the lives of refugees. These amounts run into tens of billions of euros.

The main revenue part of the federal budget is the capital turnover tax. Regional budgets are filled at the expense of industrial enterprises operating on their territory.

What is Germany's budget in numbers? The expenditure side in 2019 will amount to 335.5 billion euros, which is 2% more than the corresponding amount in 2017. Defense spending will increase and amount to 38.45 billionEuro. It has to do with Trump. The budget will increase slightly compared to last year. 21 billion euros will be allocated for the settlement of refugees and the fight against migration.

Tax cuts likely due to economic progress and €14bn of free reserves.

Conclusion

The structure of the German budget has a three-tier view. Income and expenditure parts are approximately equal. The military budget is relatively small, but growing under pressure from Trump. A very large share of the country's budget goes to the social sphere. Taxes are the main source of budget revenues. The procedure for reviewing the German budget is quite complicated.