Austria updates EC about financial strategy
The Austrian government has informed the European Commission (EC) and Eurozone financial issues watchdogs about its budget path.
Social Democrats (SPÖ) and People’s Party (ÖVP) filed a document to the political institutions’ headquarters in Brussels, Belgium, and Strasbourg, France, today (Weds). The paper features all detail information about how the coalition intends to erase the budget deficit by 2017. ÖVP Finance Minister Maria Fekter wants to achieve a consolidation which guarantees that the state does not make a structural deficit in 2016.
The EC can issue sanctions on European Union (EU) member states which ignore the recently agreed more stringent budget rules. Austria had a budget deficit of 2.6 per cent of the gross domestic product (GDP). The government initially feared that the deficit would range around four per cent. A strong performance of the Austrian economy in the crisis avoid such negative developments. The prospering export industry and the rock-solid tourism sector helped the state to high tax revenues – and a lower-than-expected budget deficit.
At the same time, Austria’s debt rate edged up by 0.3 per cent from 2010 to 2011. Austria’s debts resembled 72.2 per cent of its GDP last year. This means that Austria is in a significantly better position than most of the EU’s other 26 member states. The countries’ debts rose from 80 to 82.5 per cent of their GDPs from 2010 to 2011. The Eurozone-17 fared even worse (2010: 85.3 per cent; 2011: 87.2 per cent).
The SPÖ-ÖVP coalition defended the 26.5-billion-Euro budget consolidation package for the coming five years against criticism by the opposition. The Greens deplored a lack of structural reforms while the Freedom Party (FPÖ) claimed that the working class and pensioners would suffer the most. SPÖ Chancellor Werner Faymann rejected the attacks. He empathised that the coalition abstained from jacking up the domestic value-added tax (VAT).
Alliance for the Future of Austria (BZÖ) chief Josef Bucher said the pact, which consists of 98 individual measures, consisted of little more but “empty bubbles”. He compared the agreement between SPÖ and ÖVP with German singer Nena’s number one hit from 1983, “99 Luftballons” (99 Red Balloons).
Bucher also hit out at the government regarding the Austrian-Swiss tax treaty. Fekter agreed with her Swiss counterpart, Eveline Widmer-Schlumpf, about charging Austrians’ assets in Switzerland with a tax of 15 to 38 per cent. The Austrian finance minister explained that the rates would depend on whether people already paid income tax on the money. Fekter pointed out that aspects such as how long the money had already been kept in Swiss accounts would also matter.
While ÖVP parliament member (MP) Günter Stummvoll congratulated Fekter and her team for having reached an agreement “in so little time”, Bucher said the bilateral taxation agreement meant that “tax sinners can get away with it”. He told Die Presse on Saturday: “Small Austrian companies pay 50 per cent in taxes on their profits. I have made this experience. (…) I’d like a taxation of 15 to 38 per cent in Austria as well.”
Fekter said after meeting with Widmer-Schlumpf in Bern, Switzerland, earlier this month that the settlement would help Austria to additional tax revenues of around one billion Euros already in 2013. SPÖ Finance Secretary Andreas Schieder said incomes of 50 million Euros a year were expected from 2014.