By Maria Martinez

BERLIN (Reuters) – Tax revenues of the German federal and state governments fell sharply in July compared to the same month last year. The reason for this was significantly lower revenues from sales tax, the Finance Ministry said on Thursday.

Tax revenues from the federal and state governments fell by 7.9 percent in July compared to the same period last year to a total of 63.8 billion euros, according to the ministry’s monthly report.

Tax revenues increased by 1.9 percent from January to July compared to the same period last year, reaching 477.8 billion euros.

The German economy unexpectedly shrank by 0.1 percent in the second quarter, highlighting the ongoing problems of the eurozone’s largest economy.

“Early indicators do not suggest that a dynamic recovery is imminent,” the report said.

For the full year 2024, analysts forecast an increase in tax revenues to 863.68 billion euros, an increase of 4.1% over the previous year, according to the report.

The German cabinet passed a stimulus package in July that is intended to stimulate the economy and increase growth by more than half a percentage point by 2025.

According to estimates by the Ministry of Economic Affairs, the stronger economic growth thanks to the economic stimulus package is expected to generate additional revenue of six billion euros next year.

(1 dollar = 0.8997 euros)

(Reporting by Maria Martinez, editing by Rachel More)