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Austrian Parliament Gives Go-Ahead To 2013 Budget

by Ulrika Lomas,, Brussels

20 November 2012

The Austrian National Council has recently adopted the country’s 2013 budget, providing for new tax revenues from the bilateral withholding tax agreement concluded with Switzerland, and from the introduction of a financial transactions tax.

Following weeks of deliberations by the budget committee and a lengthy debate in plenary, Austria’s ruling coalition parties, the Social Democrats (SPÖ) and the Austrian People’s Party (ÖVP), voted in favour of changes to the 2013-2016 federal financial framework law and backed the 2013 federal finance law during a third reading. Austrian opposition parties voted firmly against the texts.

Based on expected economic growth of 1%, the budget for next year provides for spending of around EUR75bn (USD95.8bn), for revenues of around EUR68.7bn, and for a budget deficit of 2.3% (down from the previously forecast 3.1%).

During the course of the budget debate, the Freedom Party of Austria (FPÖ) criticized the record tax burden in Austria, despite the continued rise in state debt, insisting that the government has failed to implement the necessary reform measures and is merely “inventing” new taxes for citizens.

Echoing this view, the Green Party lamented the lack of reforms. Maintaining that it is useful to save, particularly in the area of health and education, the Green Party underlined the need to develop a fair tax system and to combat corruption more decisively, arguing that failure to do so is costing Austrian taxpayers billions of euros.

In agreement with the FPÖ, the Alliance for the Future of Austria (BZÖ) denounced the "record levy ratio.” The party highlighted the lack of support for small- and medium-sized enterprises and the government’s failure to strengthen competitiveness in Austria.

Defending the budget, the SPÖ emphasized that in comparison to the rest of Europe, Austria has presented “good economic data.” An increase in funds for education is proof that the budget is going in “the right direction,” the Social Democrats stressed, while at the same time warning that the tax burden must be distributed more fairly.

The ÖVP alluded to the good position of Austria as regards economic growth and unemployment and highlighted the importance of reducing debt, noting that this will serve to bring state debt to below 60% of gross domestic product by 2020.

Austria’s budget for next year is based on the stabilization and growth package of spring 2012, comprising an expense-focused bundle of consolidation measures totalling EUR27.8bn for 2012–2016.

The long-term sustainability of public budgets is being secured through the debt brake at national level and the internal Austrian stability pact at regional level.

Austria’s 2013 budget is designed to drive forward investment in the areas of education, universities, research and development and infrastructure to boost growth and employment. The budget also provides for continued structural reforms, notably in the areas of pensions, healthcare policy, public administration, public funding and the labour market with the aim of achieving a largely balanced budget by 2016, thus reducing the debt ratio on a sustained basis.

Back in October, Austrian Chancellor Werner Faymann alluded to the fact that additional tax revenues are expected next year from the withholding tax agreement concluded with Switzerland, due to enter into force on January 1, 2013, as well as from the introduction of a financial transactions tax in Austria, highlighting the fact that although such measures were once considered an “illusion”, they are soon to become a reality.

Defending the budget last month, Fekter said: "Intelligent regional economic policies, consistent budgetary discipline and investments secure Austria's superlative ranking at European and international level. Through the 2013 budget, we are already creating the framework conditions so that Austria can continue to rank in future among Europe's top countries.”

Alluding to the fact that a slight upturn in the economy is expected for 2013, Fekter pointed out that this puts Austria above the European Union average, notably thanks to the rigorous consolidation path pursued by the government.

Underscoring the need to continue on this path and to reduce the recurring deficit and the structural deficit step by step, the minister emphasized the government’s commitment to austerity to create more scope to manoeuvre in the future.

TAGS: tax | pensions | law | budget | tobin tax | education | unemployment | withholding tax | Austria | research and development

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