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Austria's Faymann "Regrets" Absence Of EU FTT

by Ulrika Lomas,, Brussels

06 December 2013

Austrian Chancellor and Social Democrat (SPÖ) party leader Werner Faymann has said he regrets the fact that the European Financial Transactions Tax (FTT) will fail to materialize next year.

While underscoring that Austria's state finances are "solid and stable," despite the high cost of the crisis, Chancellor Faymann nevertheless emphasized his disappointment that revenue from a European Union (EU) FTT can not now be included in the country's budget figures. "It is extremely regrettable that the EU FTT will not now enter into force in 2014, as initially planned, and presumably not even in 2015," the Austrian Chancellor remarked.

Austria stands by its political demand for such a tax, and notes similar signals from Germany, Chancellor Faymann stressed. Here, Faymann alluded to the fact that Germany's incoming Grand Coalition Government has pledged to ensure swift implementation of an EU FTT, within the framework of enhanced cooperation. Indeed, in their Grand Coalition agreement, German Chancellor Angela Merkel's Christian Democratic Union (CDU) and coalition partner the Social Democrats (SPD) stipulated that the levy must have a wide tax base and a low tax rate, encompassing as many financial instruments as possible.

Although Chancellor Faymann has expressed confidence that Austria's own future coalition Government will be in place by the end of the year, the SPÖ's prospective partner the Austrian People's Party (ÖVP) remains decidedly less optimistic. Even though the state finances might be healthy and on track this year, a gaping budget gap is expected to appear by 2018, a concern that has not made negotiations easy.

While the SPÖ and ÖVP are both in agreement that Austria must meet its structural "zero deficit" target in 2016, the parties remain divided on the specific fiscal consolidation measures that should be implemented in order to achieve this goal. Although both parties have united on plans for an administrative reform, as well as on plans to dramatically cut spending on tax breaks, and to raise the pension age in Austria, there are still major bones of contention. The main sticking point is that Chancellor Faymann has renewed his calls for a reform of taxation, insisting that this should be financed via the introduction of wealth-related taxes, an idea vehemently rejected by the ÖVP.

TAGS: tax | budget | tobin tax | Austria | Germany | tax reform | individual income tax | European Union (EU) | Europe | Tax

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