This system was set-up during the Weimar Republic in 1919 in order to accommodate the pre-existing advantages the Church(es) already had acquired before-hand.  It's even written in the constitution! Every year, around 10 billions euros are levied that way. The money goes to the up-keep of religious buildings, paying religious personnel (not priests, they are payed by the diocese directly) & administrative costs as well as funding social projects.