Austria Unites On 2012 Budget

by Ulrika Lomas, Tax-News.com, Brussels

16 November 2011

The budget committee of the Austrian National Council has recently given the green light to the country’s 2012 federal budget bill, providing for tax revenues of around EUR64.41bn (USD87.3bn) and for spending of approximately EUR73.58bn, corresponding to a federal deficit of 2.6% of gross domestic product (GDP).

The overall state deficit is forecast at 3.2% next year, while the debt ratio is expected to rise to 74.6% in 2012, and, after peaking in 2013, to return to 74.4% by 2015.

Commenting on the country’s creditworthiness, Austrian Finance Minister Maria Fekter rejected “apocalyptic” statements concerning Austria’s triple A rating. Indeed, Fekter emphasized that Austria has very good employment figures, that consumer demand is good, that tax revenues are growing and that the government’s consolidation programme is continually being met.

“The triple A rating is stable”, Fekter stressed.

In a separate release, again insisting that Austria’s triple A rating is not in any “acute danger”, Finance Minister Fekter warned that although the country’s economic data is currently positive, there is an undoubted need to adopt further savings measures in order to preserve its credit rating.

Maintaining that anchoring a debt brake rule in the country’s constitution would send out a strong signal across Europe in the fight against the growing debt mountain, the minister confirmed that a corresponding text is now ready and due to be approved shortly by government. Parliament is expected to vote on the bill by the end of the year.

Underscoring the need to adopt a savings course rather than an austerity package, Fekter alluded to plans to negotiate an ambitious budgetary consolidation path for the country for 2013-2015 at the beginning of next year, with planned savings in areas such as early pensions, the health system, and departmental spending.

Although open to the idea of implementing further expenditure cuts, Austria’s Financial State Secretary Andreas Schieder of the Social Democrats (SPÖ) underlined the need to include revenue measures in any forthcoming discussions, notably wealth taxes and wealth-related taxes.

The National Council is due to begin its budgetary deliberations on November 16, with a parliamentary vote on the 2012 budget scheduled to take place on November 18.

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