Finance, taxes and public service 
The modern state sets framework conditions for its citizens to live together in law and order and performs a number of services enabling them to live in safety and security.
In Germany, the functions of the state are performed by the authorities at federal, regional (Länder) and municipal level as well as by the social security institutions. Data on finances and personnel are recorded in the largely separate budgets of these administrative levels (=core budgets) and in the extra budgets maintained by independent public funds, institutions and business enterprises with their own accounting system. The purpose of the statistics of public finance and public service personnel is to collate the data in order to form a consistent and transparent overall picture that enables the different levels to be compared over time.
The statistics of public finance and public service personnel provide answers to the following key questions:
- What expenditure does the state incur to fulfil its functions and what revenue is available to public authorities for that purpose?
- Gaps between expenditure and revenue are mainly filled by borrowing? What is the resulting level of public debt?
- What financial assets does the state have and how are the assets distributed?
- To what extent do the Federation, Länder, municipalities/associations of municipalities perform business activities?
- How many personnel does the state employ to perform its functions?
In 2010, the public authorities (core budgets and extra budgets) spent EUR 1,127.8 billion – adjusted for mutual payments between public budgets at different levels – to fulfil their various functions. Statutory social insurance institutions (including their extra budgets) accounted for most of the expenditure at EUR 512.3 billion, followed by the Federation including its extra budgets (EUR 353.3 billion), the Länder including their extra budgets (EUR 303.5 billion), and the municipalities/associations of municipalities (EUR 182.2 billion). Payments to the European Union (financial shares in the EU) amounted to a total of EUR 23.0 billion.
The financial resources were employed to perform, for example, the following key functions (distribution as shown by the 2008 annual statistics of public expenditure and revenue):
- Social security: 55.5%
- Education, science and culture: 9.7%
- Public safety and order: 3.3%
- Defence: 2.4%
The money that the public authorities need to finance their functions mainly comes from taxes, fees, duties and receipts from selling assets. In 2010, the revenue achieved by public authorities - excluding borrowing - amounted to a total of EUR 1,049.6 billion.
In 2010, the Federal Republic of Germany recorded a total tax revenue amounting to EUR 530.6 billion. At EUR 372.9 billion, the largest share was contributed by joint taxes, whose revenue is divided in fixed proportions between the Federation, Länder and municipalities/associations of municipalities. Among these joint taxes, the highest revenue came from turnover tax (incl. import turnover tax) at EUR 180.0 billion (+1.7% on a year earlier) and from wage tax (after deduction of children’s allowance) at EUR 127.9 billion (–5.4% on a year earlier). Detailed information on the distribution of tax revenue, the bases of taxation, and other tax-related and economic issues is available from statistics on the individual types of tax.
The financial balance (+ = financial surplus, – = financial deficit) is calculated as the difference between revenue and expenditure in a given period. In 2010, a financial deficit of EUR 78.1 billion was recorded for all public budgets. If there is not enough revenue to cover the expenditure in a given period (= financial deficit), the public authorities have to use reserves or raise external funds from the credit market. The financial deficit of the overall public budget is mainly covered by borrowing on the credit market.
The debt (Credit market debt and loans for strengthening cash resources) recorded in the overall public budget ran up to EUR 1,694.4 billion at the end of 2009. The Federation and its extra budgets carried the largest part of the debt burden (62.2%). The Länder accounted for 31.1% of all public debts, and the municipalities and associations of municipalities – including their extra budgets – for 6.7%. Owing to their specific financial structure, the statutory social insurance institutions meet their expenditure mainly from contributions and federal grants, and therefore their level of indebtedness is low.
The financial assets recorded in the public budgets (including the extra budgets) amounted to EUR 255.7 billion in 2008. The Federation held assets to the value of EUR 112.0 billion, while the Länder and the municipalities/associations of municipalities accounted for EUR 71.3 billion and EUR 72.4 billion of financial assets, respectively.
In terms of public finance statistics, public funds, institutions and enterprises are subdivided into extra budgets on the one hand and other public funds, institutions and enterprises on the other hand. Altogether there were 14,704 public funds, institutions and enterprises in Germanyin 2008, 90% of which at the municipal level. In Germany, there were 14,704 public funds, institutions and enterprises in 2008, 90% of which at the municipal level. There are public funds, institutions and enterprises not only in selected economic branches. Instead, the scope ranges from housing societies, hospitals, supply enterprises, and institutions of higher education to the resolution agencies set up in the course of the financial market and economic crisis. In 2008, public funds, institutions and enterprises achieved proceeds to the amount of Euro 433 billion, while expenditure amounted to Euro 415 billion. They invested Euro 39 billion in tangible fixed assets in 2008.
In 2008, a total of 4.5 million people were employed in the public service to carry out the state’s functions. They were allocated across the key functions as follows:
- Social security: 0.7 million
- Education, science and culture: 1.5 million
- Public safety and order: 0.4 million
- Defence: 0.3 million
Apart from the funds required to pay active duty personnel, the public authorities had to provide pensions and related benefits to just over one million pensioners at the beginning of 2008. In addition, some 447,000 persons received survivor’s benefits under the public old-age pension system.
