Faymann bullish about debt limit

The government’s debt brake bill might not become a constitutional law.

Social Democratic (SPÖ) Chancellor Werner Faymann said today (Fri) he was ready to prepare a regular law instead of trying to add the debt limit to the constitution if the opposition kept refusing support.

The coalition of SPÖ and the People’s Party (ÖVP) needs the backing of at least one of the federal parliament’s opposition factions if the debt limit should become constitutional. The Alliance for the Future of Austria (BZÖ) is reportedly closest to approving the bill. The right-wing party is the only opposition faction the coalition is currently holding talks with.

A regular majority which the SPÖ and the ÖVP could ensure would be enough to pass a debt limit law without including it in the federal constitution. Faymann announced today: “The debt brake will definitely be created.”

BZÖ chief Bucher admitted today that there were “difficulties” and huge disagreements of opinion regarding his idea of limiting the Austrian tax and contribution ratio at 42 per cent. The richest Austrians are currently forced to pay an income tax rate of around 50 per cent. Bucher argued that his suggestion ensured no further tax burden on Austrians in economically uncertain times.

His idea was acclaimed by ÖVP Finance Minister Maria Fekter and Christoph Neumayer, the general secretary of the Association of Austrian Industries (IV). Neumayer called the proposal “interesting and worth discussing.” He stressed that the IV was against new or higher taxes and said that the coalition should also try to improve the efficiency of the public health sector and the Austrian pension system.

Fekter and Neumayer are outspoken opponents of a tax on assets despite claims by many economists that there is a striking imbalance between taxation of labour and assets in Austria. Fekter branded the SPÖ’s asset tax idea a “sniffing tax” and said she wondered whether the party planned to send out detectives to estimate the value of people’s jewellery.

Her party is in favour of freezing subsidies for Federal Railways (ÖBB). Harsh cuts into the social system are considered as well, according to reports from an extraordinary meeting of the party’s cabinet of ministers in an abbey in St. Florian, Upper Austria.

SPÖ General Secretary Günther Kräuter said setting a limit on the federal tax and contribution ratio would rob lawmakers of their flexibility in the coming years. “This is not a good idea,” he said about Bucher’s plans. The Federal Trade Union (ÖGB) is also against the BZÖ’s suggestion. ÖGB President Erich Foglar announced his organisation was “generally sceptical” about the whole debt brake plan. He criticised the government for failing to disclose its austerity measures.

The BZÖ chief’s willingness to debate debt brake details is seen as a desperate bid to turn the spotlight on his party. The BZÖ has struggled in polls ever since it won 10.7 per cent in the general election of 2008. The party is at risk of dropping out of the parliament in the next ballot which is scheduled for 2013. A poll published by OGM today shows that only four per cent of Austrians eligible to vote could imagine supporting the party. This would be just about enough to make it into parliament.