More money for Saxony in future thanks to census

According to a calculation by the Ifo Institute, Saxony can expect to receive more money from the federal state financial equalization scheme in future despite a slight decline in population. The institute put the amount at 37 euros per inhabitant and a total of 149 million euros. The reason for this is the census, in which the population figures in the federal states were corrected upwards or downwards.

The Free State benefits from a statistical effect: it is not the absolute number of inhabitants that is decisive for the amount of the allocations, but the relative share of the state's population in the total German population. As the number of inhabitants in Saxony (1.03 percent) is falling less sharply than the figure for Germany as a whole (-1.6 percent), the revenue from the federal state financial equalization increases for the Free State.

Winners and losers in the census

According to the Ifo Institute, Bremen and Saarland can expect significantly more money per capita from the fiscal equalization scheme. Additional income of 242 euros per inhabitant was calculated for Bremen and 192 euros per inhabitant for Saarland. The reason for this is the upward adjustment in the number of inhabitants.

"The biggest losers are Berlin, Hamburg and Mecklenburg-Western Pomerania. This is due to the fact that the population figures here were corrected downwards particularly significantly," explained Joachim Ragnitz, Deputy Director of the Ifo Dresden branch.

The Saxon Ministry of Finance had held back with its own calculations after the census. "For a quantification of the actual financial impact, the updated population figures for the years 2022 to 2024 remain to be seen," the ministry stated. The Financial Equalization Act between the federal and state governments provides for a staggered adoption of the census results. In the equalization year 2022, one third and in the equalization year 2023 two thirds of the census-related differences in population figures would be included in the settlements.

"Saxony is already affected by a continuously declining population. The census results confirm this once again and will have to be taken into account accordingly in the various areas of responsibility of the Free State and in the future design of structures," it continued. The effects of the census on revenue in the federal-state fiscal equalization system would be taken into account in the November tax estimate based on the information available to date.