Class struggle accusations shatter reform talks

The feud of the government parties is intensifying after People’s Party (ÖVP) whip Karlheinz Kopf accused the chancellor of engaging in a class war.

Kopf told the Kurier yesterday (Sun) that Werner Faymann would have to accept the main responsibility for a possible failure to agree to a savings package within the agreed deadline. Social Democrats (SPÖ) and the ÖVP want to finish their negotiations by the end of this month to make the measures effective from April.

Kopf said the chancellor and SPÖ chairman was engaging in a class struggle because of the pressure his party’s clientele is putting on them. The ÖVP member called on the SPÖ to give up campaigning for a reintroduction of a tax on inheritances. Kopf’s party is against any kind of higher or new taxes. However, reports have it that SPÖ and ÖVP already agreed about introducing a tax on real estate deal profits. The coalition partners allegedly also agreed that people with exorbitantly high wages should have to pay higher income taxes.

SPÖ General Secretary Laura Rudas said in a reaction to Kopf’s statements that backbenchers should not launch attacks “and lose their nerves”. Rudas and SPÖ whip Josef Cap said their party’s model for a tax on capital transfers and inheritances based on a concept created by German Chancellor Angela Merkel’s Christian Democratic Union (CDU) some years ago. Private inheritances worth lower than 300,000 Euros should not be taxed, the SPÖ suggested.

Austria’s inheritance tax was scrapped in 2008. It helped the state to revenues of 150 million Euros a year on average. Experts made aware of the immense administrational efforts the state had to finance. Some researchers said the high costs the taxation created failed to justify a charge on inheritances. Income taxes’ contribution to the state’s budget is much higher. Around 21.6 billion Euros were generated by income taxes in 2011, up by 3.9 per cent compared to 2010.

The government decided on trying to agree on a savings package quicker than initially planned after US American rating agency Standard & Poor’s (S&P) lowered Austria’s rating by one grade from the best possible estimation of AAA to A+. The decision was made public earlier this month. It came shortly after the world’s other two leading rating agencies, Moody’s and Fitch, confirmed Austria’s AAA.

Austria has debts of 215 billion Euros. Final facts about the state’s fiscal statistics for 2011 show that the debts made 72.2 per cent of the gross domestic product (GDP). ÖVP Finance Minister Maria Fekter initially estimated the debts to be as high as 73.6 per cent of the GDP. The Austrian budget deficit was 3.3 per cent in 2011. SPÖ and ÖVP feared it would range around 3.9 per cent.

The solvency of only four Eurozone members is rated with AAA by S&P, Moody’s and Fitch after S&P downgraded Austria and France. Financial market observers fear that S&P’s disputed decision will be succeeded by a downgrade of the soundness of companies in which the Republic of Austria holds shares.

ÖVP Vice Chancellor Michael Spindelegger said the rating agency’s decision to lower Austria’s rating and economic outlook was “incomprehensible” to him. Hannes Swoboda, who represents the SPÖ in the European Parliament (EP), told radio station Ö1 he was disappointed by S&P’s failure to consider aspects such as his home country’s low jobless rate. Just four per cent of Austrians are out of work. No other country in Europe has a lower unemployment rate.