Positive trend in trade tax

After the key allocations from the state of Hesse and the equalization payments (transfer expenses) for the youth and social sectors, trade tax is one of the most important - albeit highly fluctuating - sources of income for the City of Offenbach. The amount of trade tax to be expected can only ever be forecast in the preparation of the city's annual budgets. This is based in particular on previous developments and the general economic conditions. The establishment of new companies also plays an important role. However, experience shows that from the middle of the year onwards, the treasurer's office can use the companies' tax registrations to make a fairly reliable calculation of the amount that can actually be expected at the end of the year.

According to city treasurer Martin Wilhelm, the forecasts are currently very positive.

Wilhelm gets specific: "As of the end of July, we can report an all-time high of 114 million euros. This is an excellent interim result in view of the 82 million euros budgeted for the 2023 financial year." However, the year is far from over, which is why the forecasts need to be treated with caution, Wilhelm continued: "Companies may deregister for tax purposes at any time, which could reduce the current level. This is not unusual and has already happened in many years. Conversely, the city has already benefited from special effects that resulted in one-off jumps in revenue. So we will have to wait and see how things develop. But the signs are really good."

A look at the past shows how much revenue fluctuates, especially during economic crises. In 2022, the city received 75.6 million euros from trade tax, in 2021 it was 85.2 million euros and in 2020 only 52.7 million euros due to coronavirus. The 2019 figure was also comparatively low at 61.7 million euros. The previous record year was 2018 with 96.2 million euros thanks to special tax effects.

Due to the vulnerability of various sectors to the crisis, the city of Offenbach is focusing on future-proof sectors and a mix of services, skilled trades, production, wholesale and retail as well as banks and insurance companies when attracting new companies. "The settlements and company expansions in Kaiserlei, for example by the AXA Group and Helaba, were an immensely important step in putting Offenbach's economy on a broad footing - with a view to the future, however, this also applies in particular to the settlement of Samson and Biospring on the Innovation Campus," says Wilhelm and summarizes: "Only if we attract stable companies that are capable of long-term change to Offenbach can economic fluctuations be better balanced out in the future."

However, there is one fly in the ointment for the city treasurer:

"This is understandable in this system: The stronger the financial performance of a municipality, the less support it receives in the form of key allocations via the municipal financial equalization system. And, of course, it is good if the city's economic and therefore financial base grows thanks to strong companies with good jobs."

The city is urgently reliant on increased revenue, Wilhelm concludes: "Drawing up the 2024 budget will be another challenge due to the high pay settlement for administrative staff and the generally sharp rise in inflation costs and interest rates. Due to the rise in interest rates alone, we will have to pay an additional six to nine million euros a year for loans. With the higher income, the city's reserves are increasing. We need these reserves to be able to finance the additional expenditure and the upcoming investments in schools and daycare centers."