Diamona & Harnisch - Life's Finest Values
Menu
Blog | 28. September 2017

BERLIN’S TURN-AROUND: “JOBS ARE UP, DEBTS ARE DOWN”

 

For decades, Germany’s capital has been saddled with an enormous burden of liabilities. Recently, this debt amounted to almost EUR 63 billion. The city state has a longstanding image as one of the Republic’s most habitual debtors. And who could forget the phrase, “poor, but sexy,” once used by former mayor Klaus Wowereit to describe his Berlin? Now the city has turned itself around. Berlin has shown that it can do things differently: making money, reducing debt, creating perspectives. The city has had to cut costs over the past few years and has done so consistently – with success. Meanwhile, the City on the Spree is taking in more than it spends. Finance Senator, Matthias Kollatz-Ahnen, expects a surplus of EUR 716 million this year. The generally good economic climate, population growth, the establishment of new industries and the boom in the startup sector have all contributed to this economic upswing.

 

SENATE PLANS TO INVEST BILLIONS IN INFRASTRUCTURE

Since 2011, Berlin has been paying off its debts at the rate of hundreds of million a year. This year, repayments will total EUR 413 million, which could reduce debt to less than EUR 59 billion. Yet the Senate still has enough left over to hire more administrative staff and invest in schools, roads and public transport. The savings program has already generated more than two billion euros, which the Senate has invested in the “Special Fund for Infrastructure, Growing City and Sustainability.” These funds are an important building block for the future development of the Spree metropolis, which has attracted more and more people for seven years in a row. Currently, around 3.67 million people live in Berlin. And the upward trend is set to continue.

 

SOLID GAINS IN TAX REVENUES

More people and more companies means more revenue. According to the tax authorities, Berlin collected around EUR 14.7 billion in 2016 – 1.13 billion more than in the previous year. Income tax on wages and salaries alone amounted to EUR 1.3 billion; sales tax revenues were even higher at EUR 1.5 billion. And although the tax authorities have forecast a decline in trade tax revenues for this year, the figure rose from EUR 736 to 960 million in the first half of the year alone.

In addition to traditional industrial enterprises, growing service and public sectors, tourism is also contributing to increased tax revenues: last year alone, the City Tax introduced in 2014 filled the city coffers with an additional EUR 45 million – an increase of around EUR 2.4 million over 2015.

Berlin is on the right track and has been for five years now. Rising tax revenues and low interest rates have already led to a budget surplus of EUR 1.25 billion. The last time the city state had to take out a net loan was in 2011. Ever since, debts have been falling and revenues have been rising. These two factors also secured additional funds from Germany’s interstate financial redistribution scheme. Additional tax revenues generated by city authorities and state-owned companies will contribute to the budget’s projected surplus in 2017. Roughly EUR 152 million is expected to be earned as income from investments in public companies as well as from fees, fines and penalties. It also looks good for the coming year. Tax authorities expect revenues of EUR 21.4 billion from taxes, Germany’s interstate financial redistribution payments and other additional payments in 2018. By 2019, these payments could total as much as EUR 22 billion.

Archiv

 
Blog | 28. September 2017

BERLIN’S TURN-AROUND: “JOBS ARE UP, DEBTS ARE DOWN”

 

For decades, Germany’s capital has been saddled with an enormous burden of liabilities. Recently, this debt amounted to almost EUR 63 billion. The city state has a longstanding image as one of the Republic’s most habitual debtors. And who could forget the phrase, “poor, but sexy,” once used by former mayor Klaus Wowereit to describe his Berlin? Now the city has turned itself around. Berlin has shown that it can do things differently: making money, reducing debt, creating perspectives. The city has had to cut costs over the past few years and has done so consistently – with success. Meanwhile, the City on the Spree is taking in more than it spends. Finance Senator, Matthias Kollatz-Ahnen, expects a surplus of EUR 716 million this year. The generally good economic climate, population growth, the establishment of new industries and the boom in the startup sector have all contributed to this economic upswing.

 

SENATE PLANS TO INVEST BILLIONS IN INFRASTRUCTURE

Since 2011, Berlin has been paying off its debts at the rate of hundreds of million a year. This year, repayments will total EUR 413 million, which could reduce debt to less than EUR 59 billion. Yet the Senate still has enough left over to hire more administrative staff and invest in schools, roads and public transport. The savings program has already generated more than two billion euros, which the Senate has invested in the “Special Fund for Infrastructure, Growing City and Sustainability.” These funds are an important building block for the future development of the Spree metropolis, which has attracted more and more people for seven years in a row. Currently, around 3.67 million people live in Berlin. And the upward trend is set to continue.

 

SOLID GAINS IN TAX REVENUES

More people and more companies means more revenue. According to the tax authorities, Berlin collected around EUR 14.7 billion in 2016 – 1.13 billion more than in the previous year. Income tax on wages and salaries alone amounted to EUR 1.3 billion; sales tax revenues were even higher at EUR 1.5 billion. And although the tax authorities have forecast a decline in trade tax revenues for this year, the figure rose from EUR 736 to 960 million in the first half of the year alone.

In addition to traditional industrial enterprises, growing service and public sectors, tourism is also contributing to increased tax revenues: last year alone, the City Tax introduced in 2014 filled the city coffers with an additional EUR 45 million – an increase of around EUR 2.4 million over 2015.

Berlin is on the right track and has been for five years now. Rising tax revenues and low interest rates have already led to a budget surplus of EUR 1.25 billion. The last time the city state had to take out a net loan was in 2011. Ever since, debts have been falling and revenues have been rising. These two factors also secured additional funds from Germany’s interstate financial redistribution scheme. Additional tax revenues generated by city authorities and state-owned companies will contribute to the budget’s projected surplus in 2017. Roughly EUR 152 million is expected to be earned as income from investments in public companies as well as from fees, fines and penalties. It also looks good for the coming year. Tax authorities expect revenues of EUR 21.4 billion from taxes, Germany’s interstate financial redistribution payments and other additional payments in 2018. By 2019, these payments could total as much as EUR 22 billion.

Archiv

 

© 2017 D & H Projektmanagement GmbH | Voßstr. 23 | 10117 Berlin | T. +49(0)30. 89 38 46 0 | info@diamona-harnisch.com | Monday – Friday: 09:00 am – 18:00 pm
ImpressumHaftungsausschluss | Datenschutz

Instagram

© 2018 Diamona & Harnisch Development GmbH
Voßstr. 23 | 10117 Berlin | T. 030 89 38 46 0 | info@diamona-harnisch.com

Imprint & Disclaimer