City Association expects unprecedented losses due to the corona crisis

At least 15 to 20 percent of the trade tax would break away on the national average, says the President of the City Council, Burkhard Jung. According to a new forecast, the burdens are at least 20 billion euros this year.

Burkhard Jung (SPD), Lord Mayor of Leipzig and President of the City Council, fears unprecedented losses due to the Corona crisis.

Dhe German Association of Cities expects unprecedented financial losses for the municipalities as a result of the Corona crisis. According to a new forecast, the burdens are at least 20 billion euros this year. “The municipal budgets will suffer such high losses as we have never seen them in the history of the Federal Republic,” said the President of the City Council and Lord Mayor of Leipzig, Burkhard Jung, of the German Press Agency.

At least 15 to 20 percent of the trade tax would break away on the national average, possibly even significantly more, said Jung. The results of the current tax estimate are expected in mid-May. The City Council renewed the demand that the federal and state governments should set up a multi-billion municipal rescue package. The statements come shortly before Chancellor Angela Merkel (CDU) holds further consultations with the state prime ministers on Wednesday.

Decline in economic output hits municipalities

“The cities shoulder a lot of tasks in the Corona crisis,” said Jung. “We are supporting the federal and state governments with all our might to overcome this crisis. Countless local employees are doing their best for it. ”However, the sharp decline in economic output will also have a massive impact on the budgets of all municipalities. “A high loss of income, but also an increase in expenditure, will cost the municipalities at least 20 billion euros this year.”

In its spring projection, the federal government expects the gross domestic product to fall by 6.3 percent this year – this would be the worst recession to date in the post-war period. The forecast is the basis for the tax estimate. The economy has been hit hard by the massive restrictions in the fight against the virus. Many companies have lost orders and sales.

Jung said the Association of Cities expects the biggest slump in business tax in the second quarter. “Here we have to reckon with losses in our most important city tax that go well in excess of 25 percent. We will be able to say more precisely at the beginning of June. ”A joint effort by the federal and state governments is now necessary to ensure that the cities are able to act.

Emergency parachute necessary

“We need a municipal rescue package that is backed by a double-digit billion amount,” said Jung. “Loss of municipal income and additional expenditure must be compensated for on a large scale by the federal and state governments. Because our cities must be able to act and perform well during and after the crisis. They have to cope with the consequences of the crisis and offer their citizens good services, support clubs and associations, promote urban development, build daycare centers and schools. “

The federal and state governments should not let the municipalities down. “And I am confident that you will take this call seriously.” The announcement by Federal Finance Minister Olaf Scholz (SPD) that he would submit a proposal is encouraging. “This announcement now needs to be concretized quickly by the summer.”

The Association of Cities expects the federal states to contribute a considerable part to a rescue package for the municipalities. “They will have to take additional resources into their own hands so that their cities remain capable of acting,” said Jung. “The federal states will have to increase the municipal funding through their municipal financing laws for the next year in such a way that this succeeds.”

Almost a month ago, the City Council announced that it was expecting high tax losses. The bottom line was that at the beginning of April, the Association of Cities expected a deficit of the municipalities in the double-digit billions for 2020.