The last article was about the outrageously high tax burden in Germany, we looked at 41 different German taxes. We did it as a way to understanding the extent of the greed and cruelty of states when it comes to plundering their citizens.
The German federal states earn more than 1 trillion euros every year. These revenues are, of course, offset by outrageously high expenditures.
The frightening thing is that for many Germans, the state does not spend too much, but too little. The recurring slogans of socialists and leftist are “the state will be cut back to nothing” or even “tax cuts will cost billions”. This is an Orwellian perversion of the truth; in reality, government spending keeps increasing every year.
All public service problems are not revenue problems but spending problems. A state which earns over 1 trillion euros should be able to provide enough money for proper highways and school toilets, but this doesn’t happen in Germany.
What the political left likes to say about income distribution among private citizens actually applies to the state: the state has enough money; it is just in the wrong hands.
At this point, let us have some more fun and take a look at how this misallocation of taxes plays out in reality. In a short paper, we will present the worst projects with which the German taxpayers are burdened.[Again, we will see it in the case of Germany, because if it were in the country we have to pay taxes in it would not be fun :-)]
As a rule of thumb: it must be an expenditure that serves a specific, larger goal, under which various individual projects can fall; and it must have cost at least 10 million euros because if we set the limit below that, the waste caused to the German taxpayer is almost infinite. Nor will this list take into account the biggest spending items – the pension pyramid scheme, for example – because these expenditures are not true ‘wastes’, but rather bad versions of things that would otherwise be provided by the free market.
When talking about wastes, we will only introduce expenditures that could be immediately eliminated without replacement and without harming anyone (if a few bureaucrats take in less loot, we will not count that as damage). All examples given refer to cases from the last ten years (but the project may have started before that).
1. Energy revolution
Cost: more than 100 billion euros
The Green Party certainly represents the dominant philosophy of life in Germany. Although this view does not translate into election results, the Greens’ ideas are the ones that most influence what happens in politics. No country or society in the world is as obsessed with ‘protecting the environment’ as much as Germany is; no matter which party or social movement, all are more or less Green.
This is most evident in the ‘energy revolution’. Since the 1990s, the state has been trying to promote green energies such as solar power, wind power and biomass. For example, the operators of solar and wind power plants receive a fixed remuneration from the state.
The state takes the money for this by plundering electricity customers. In addition, the operators of renewable energies have the privilege of having to pay fewer taxes.
It is estimated that the cost of promoting renewable energies has now exceeded 100 billion euros since the 1990s, and there is no end in sight. The numbers could rise to over 200 billion by 2050; other estimates assume even higher numbers.
The consequences for Germans are catastrophic: they pay the highest electricity prices in Europe. Many families can no longer afford to pay their electricity bill, so their electricity is temporarily cut off. That is the reality in Germany.
As might be expected, the goal of converting the energy supply from fossil fuels to renewable energies was not very successful. The share of renewable energies in electricity consumption indeed rose from less than ten per cent in 1990 to over a third today.
However, most of the German solar plant operators who received the subsidies still went bankrupt, which is why most of the solar systems in Germany currently come from China and India. All the subsidy money has not led to more innovation among the beneficiaries, but miscalculations and zero innovations.
Who could have known that beforehand? Except for anyone who knows anything about economics, of course?
Furthermore, it is deceptive to say that the energy supply is provided by a third of renewable energies because these figures are very seasonal. For many months now, thanks to the energy transition, Germany is dependent on electricity imports – ironically from demonised forms of energy such as coal or nuclear power.
The energy transition has been a disaster: electricity has become much more expensive, families have been reduced to poverty, the power supply has been permanently jeopardised, the country has become dependent on electricity imports, and German solar plant operators have gone bankrupt.
The worst may still be ahead. Many researchers are warning of a widespread blackout since renewable energies are not only very expensive, but also less reliable than fossil fuels.
Such an event could have terrible consequences, with fatalities to be expected in any case. It is likely that even then the lesson will not be learnt, but simply more promotion of renewable energies will be decided upon.
We do not know which forms of energy would prevail in a free electricity market, but it is clear that we currently have cheaper alternatives in the form of fossil fuels and nuclear power.
If avoiding CO2 emissions is so important, we could go fully nuclear; contrary to what the Greens say, it is a very safe form of energy. The current energy policy is clearly the worst form of tax waste.
2. Rescue of the Euro
Cost: more than 50 billion euros
Before the introduction of the euro, Germany was considered a country with a particularly stable currency compared to the rest of Europe. Greece, on the other hand, had devalued its currency several times in recent decades to pay off its gigantic mountains of debt.
It wouldn’t have been hard to anticipate what happened next: the total collapse of the Greek economy. The Greeks continued to maintain their tradition and accumulate gigantic debts, but this time they could not reduce them by devaluing their national currency. Somehow the countries in the euro zone managed to look quite surprised when they heard about how badly Greece was doing in 2010.
The next step was even more surprising: Germany, the country with the highest economic power in Europe and with comparatively low debts, was asked, along with other economically strong countries, to help pay off the Greeks’ debts. But not without being hated for it, because the ‘rescue countries’ expected the Greeks to follow a strict policy of austerity.
In truth, many economists had precisely foreseen this development. When countries with completely different fiscal strategies are forced into one currency, such conflicts are inevitable.
The huge debt of Greece and the other crisis countries, the collectivisation of debt throughout the eurozone, the loss of autonomy over their own budgets among the crisis countries as a result of the bailout packages – all of this could have been foreseen when the euro was introduced.
The disastrous policies of the three bailout packages for Greece (2010, 2012, 2015) probably cost the German taxpayer more than 50 billion euros – the exact cost of Germany’s participation in the bailout packages is difficult to quantify. Not to be forgotten, there were further bailout packages for Ireland, Portugal, Spain and Cyprus.
Many German Social Democrats manage to be so parochial in their thinking that they see Germany as benefiting from the rescue packages because the German banks are the Greeks’ greatest creditors.
Their thinking goes: Greece takes out loans from German banks, finances an unsustainable standard of living for itself, cannot repay the loans and asks the German government to take over the loans, so the Germans are the winners.
Anyone who has paid close attention will notice that this is not entirely true. The German taxpayers were once again plundered and the German banks, who hoped for repayment, would have to be content with a debt cut.
The only profiteers – until their collapse – were the Greeks who lived at the expense of others. In the end, however, they too paid their bill with a lost generation.
Ultimately, the solution to the Greek tragedy would not simply be to reintroduce the Drachma but to finally bring fiscal discipline to Greece. Devaluing one’s own currency again and again in order to pay one’s own debts is also not a solution. If this does not succeed in the long term, the next lost Greek generation is imminent.
3. Merkel’s asylum seekers
Cost: More than 50 billion euros
In 2015, we were given new people. These new people quickly attracted attention due to questionable dance moves and their misappropriation of trucks – but that is another story. Unusual for a gift was the exorbitantly high cost these people brought to the German citizens who took them in.
At this point, only the asylum seekers who came to Germany in 2015 and 2016 – Merkel’s summer generation – are counted. For this cohort alone, the German state spent about 50 billion euros.
In the first year after their arrival, it was 20 billion, the costs for the same cohort decreased steadily in the next years (of course, money continues to be spent on new asylum seekers) and with their slow integration into the labour market, the majority could now earn most of their income by themselves.
Of course, spending on asylum seekers is not generally reprehensible. Some people flee out of genuine need, and even if the German asylum system needs to be fundamentally reformed, these people deserve help and cannot wait.
But what happened during the summer of 2015 had nothing to do with helping people in need. In fact, Merkel left the borders open for no reason at all; there was no danger to the lives of people in refugee camps in Lebanon and Turkey. The more than 1 million asylum seekers who subsequently came placed an enormous economic and social burden onto Germany, and whether the integration of the new people will succeed, will only be seen in the coming decades (doubts about this are justified). They should have never been allowed into the country uncontrolled.
The only reason Merkel made her decision, which was then quashed by the Austrians, was apparently the media pressure she feared from ugly pictures at the border.
But at least Merkel proved her chutzpah when she later claimed that only her deal with Erdogan had secured the borders and stopped the flow of refugees. At first, they were more valuable than gold, then it was a great achievement to stop their influx …
4. Civil servants’ pensions
Cost: 70 billion euros each year
It is often said that we live in a two-class society. This refers to the differences between the rich and the poor. In reality, we live in a society in which privileges exist primarily for one class: civil servants.
Not only are they free from their work performance being measured thanks to their permanence, but they have their own pension system, separate from the rest of society.
Now, as we said earlier, let us consider spending on retirement not as a waste, but as a bad version of a necessary cause: retirement savings.
However, civil servants’ pensions are very much a waste: civil servants, like all Germans, could pay into the normal pension scheme and later receive a pension which is proportionate to what they have paid in, which would not be optimal, but would be better for taxpayers and overall fairness.
A separate pension system for civil servants, provided by the public purse, is completely unnecessary and could be abolished at any time, so it is a classic case of wasting taxes.
Expenditure on civil servants’ pensions amounts to 70 billion euros per year. In absolute terms, this makes it the largest expenditure per year on this list. However, since civil servants would still receive some form of state pension, even if their pension system were abolished, the money that is actually wasted, is less.
Nevertheless, it is certainly several billions of euros that is wasted, since civil servants have higher entitlements than ordinary pensioners (which brings us back to the two-tier society).
Obviously, civil servants do not want to be dependent on demographic trends, otherwise, their salaries in old age could be in jeopardy. Pyramid scheme for plebeians, pensions for civil servants.
5. Arms purchases by the Bundeswehr (German Armed Forces)
Cost: More than 13.5 billion euros
The existence of the Bundeswehr is superfluous. No one considers German soldiers particularly important in the fight against the Taliban or as a bulwark against the Russians. In an emergency, Germany has the right to nuclear sharing.
Nevertheless, the U.S. and other NATO member countries are desperate for Germany to increase its defence spending to meet the informally agreed goal of spending 2% of GDP on defence. As a result, Germany spends a lot of money to re-equip the Bundeswehr.
However, by spending more, the federal government does not manage to increase the armaments capability of the Bundeswehr, and in doing so, simultaneously wastes a lot of taxpayers’ money.
In 2019, the ‘Taxpayers Black Book’ calculated that the Bundeswehr’s armaments purchases were an incredible 13.5 billion euros more expensive than initially calculated. The largest billion-euro programme was the Eurofighter programme, which was 6.9 billion more expensive than the Bundestag (German parliament) had originally decided.
The renovation of the ‘Gorch Fock’, which is scheduled to sail again in 2021, cost taxpayers more than ten times the initially calculated price, namely 135 million euros instead of 10 million.
There is massive waste everywhere in the Bundeswehr. Instead of the Taliban taking us seriously, our army will probably remain a joke – but a very expensive joke.
6. Cultural subsidies
Cost: 10 billion euros each year
Who hasn’t watched a comedy programme on a government funded TV channel and thought to themselves: this is worth spending billions on every year! Probably no one with an IQ above the average Antarctic temperature.
That doesn’t stop the state from funding these ‘comedians’, who in the majority of cases are of the far left, and whose work confirms the prejudice that Germans can’t be funny.
Every year, 10 billion euros are put into cultural subsidies for all the snot we must listen to that passes for ‘social criticism’: criticism of ‘the rich’, bankers, U.S. Republicans, ‘climate deniers’, and especially bold criticism of the group no one else dares to criticise publicly … the Nazis.
The Coronavirus pandemic has shown exactly how much is wasted on these pseudo-artists. The state-financed cultural institutions suddenly had to complain about there being a money shortage because many of their publicly financed appearances were cancelled.
That could have served as a source to fundamentally rethink cultural subsidies. Instead, these freelance performers started a campaign with the motto: ‘Culture is relevant to the welfare system!’
That is of course not true, even real culture is not systemically relevant in times of crisis, but especially not modern state-financed culture, which represents the low point in German cultural history. But money is now being taken in hand to save the “culture” … because who could live in a country where Greta is not praised every week and old, white men are ridiculed.
7. Stuttgart 21 rail project
Cost: 8 billion euros
The Stuttgart 21 rail project is best known because of its massive criticism from angry citizens against its construction. They cited environmental protection as the reason for their rejection and in some cases put up violent resistance.
In the end, a referendum was held, and the station project was waved through. None of the opponents of Stuttgart 21 seemed to care about the financial burden which would be put onto citizens. Presumably, at the time, they did not anticipate the monster that was coming. The trees and the hermit beetles were the bigger problems (and maybe still are for some Greens).
How does the balance sheet look? The project has been planned since 1995. In the beginning, it was supposed to cost 2.5 billion euros; in 2009, the cost was already quoted as being 4 billion, and now it is already 8 billion. An incredible scandal.
Of course, these numbers led to fewer protests than those who voiced their concerns against Stuttgart 21 for the alleged environmental impact that it would have.
The priorities of the Germans are therefore clearly defined: The protection of the hermit beetle brings more people onto the streets than billions of euros of wasted tax money.
8. Berlin Brandenburg Airport
Cost: 7 billion euros
The classic! Anyone who thinks of wasted taxes probably thinks first and foremost of Berlin Brandenburg Airport. This prestigious Berlin project, which was supposed to replace the venerable Berlin-Tegel Airport, was to cost two billion euros and was to open in 2012.
Nothing really came of it. New records were set every year. More and more absurd miscalculations made headlines. It is amazing that it is even possible to make as many incorrect calculations as was done when building Berlin Brandenburg Airport. In the end, the cost was seven billion euros.
Unfortunately, the public reaction showed that the tragedy of socialism (or better put in this case, the tragedy of social democracy) is just a joke for most people. There was a lot of laughter and little anger.
The billions wasted were nothing more than a statistic, an anecdote used by unfunny comedians. Nothing was learnt from the disaster. Fittingly, the airport actually opened at the end of 2020 – when no planes were allowed to take off because of the lockdown that was in place due to the Coronavirus pandemic.
9. Federal IT consolidation
Cost: 3.4 billion euros
In 2015, the federal government decided that all federal agencies should have a unified computer system. Until then, all agencies had their own computers and their own software, which resulted in there being over 100 different computer centres and 1000 server rooms.
Wanting to stem this chaos was understandable. The execution, however, was disastrous. After more than five years, the project is still not finished and will be delayed until at least 2025.
The costs to date amount to 3.4 billion euros. More than half a billion will be spent on consulting firms alone. Paying any programmers from Github would probably have saved quite a bit.
10. Elbe Philharmonic Concert Hall
Cost: 866 million euros
A particularly notorious case of wasted taxes is the Elbe Philharmonic Concert Hall. It was supposed to cost 77 million euros. In the end, it turned out to be 866 million. That is the cruel balance sheet.
In the future, the concert hall will certainly be one of Hamburg’s landmarks, and younger generations will have forgotten the shameless history of its creation. It was originally supposed to open in 2010, but massive miscalculations led to a seven-year delay.
At least this incredible case, comparable to Berlin Brandenburg Airport, made many headlines. Of course, the taxpayers will not get their money back.
11. Restoration of the State Opera House in Berlin
Cost: 440 million euros
The State Opera House Unter den Linden is a prestigious project of the federal government. While privatisation would of course have been the best option, the government-funded renovation should have been one of the less dismal cases of tax spending.
But it did not turn out that way. The renovation was delayed by four years and the actual costs of 440 million euros exceeded the planned costs by 200 million. Thus, a commendable project became another example of massive government mismanagement that was taken over by the taxpayers – mostly completely unknowingly.
It is particularly sad that a centuries-old cultural institution of Germany has thus become yet another million-euro grave of wasted taxes.
12. Tunnelling under Augsburg central train station
Cost: More than 230 million euros
Yes, Bavaria also makes it into the ranking. The city of Augsburg wanted to rebuild its train station. It was planned that a tunnel would run under the station and a tram stop would be built; the costs were estimated at 70 million euros in 2006.
To this day, the construction has not been put to use, and the modified cost plan is between 230-250 million euros – others assume 300 million – all in all a three-to-four-fold increase.
The good news is that in the middle of the Coronavirus pandemic, the tunnelling was completed, but the tram stop is not expected to open until 2023. Who knows when the tramline will really open and how many millions will have been squandered by then?
13. Termination of a lease agreement at the port of Hamburg
Cost: 118 million euros
The port of Hamburg is legendary. Unfortunately, it is also not free from state interference in all areas. In 2009, the city of Hamburg paid a whopping 118 million euros to a logistics company to prematurely terminate a lease on the Steinwerder site. Yet the lease would have expired shortly thereafter, and the area vacated in 2016 remains unused to this day.
Even better: in the summer of 2020, highly toxic arsenic was found in the harbour basin. It is therefore not possible to predict when construction will begin. This means that Hamburg makes it onto this list for a second time.
14. Car tolls
Cost: 77 million euros
A project that not only costs a lot but is cashed in on before it even begins – this particularly artistic form of tax waste was brought about by the car toll.
The former Federal Minister of Transport, Andreas Scheuer, planned to introduce it in 2013 to ease the burden on German taxpayers. Foreigners should have paid the car toll, but Germans would have had to pay less vehicle tax.
The result: so far, 76.7 million euros have been spent on the project, and in 2019, the EU declared the car toll to be incompatible with EU law.
Scheuer won’t care, he already has another governmental department and there is no political liability for wasted taxes.
15. Official School Administration Baden-Württemberg (ASV-BW)
Cost: 47 million euros
Similar to point number 9 on the list, this example is about an IT project. The state government of Baden-Württemberg wanted to use this project to reduce administrative work and make it easier to collect data for political purposes. The planned cost was 4 million euros. In the end, it turned out to be 47 million euros.
The time period is also telling: the software was supposed to be used in all schools as early as the 2008/09 school year, but by the 2018/19 school year it was in use in fewer than ten per cent of schools.
Another flop on the subject of education and IT from Baden-Württemberg was the Ella education platform, on which the state government wasted 6.5 million euros – but this is not enough to be included in this highly competitive ranking.
And that’s as far as we’ve come today. We hope that today’s article has been useful for three things:
- First, to understand that contrary to what many think, neither German politicians are serious, nor Germans in general such good thinkers.
- Second, to confirm that money (and projects of any kind) will always be better in private hands than at the disposal of politicians and civil servants.
- And third, to take the final step and stop contributing to all this by paying taxes.
Whenever you want, you can hire your Tax Free Today consultation to help you analyse your situation and understand the options you have.