Experts Do Not Believe in Budget Consolidation Without Tax Increases

"I think it's very difficult to do this in the short term," said Margit Schratzenstaller from the Institute for Economic Research on Ö1's "Mittagsjournal" about the plan to save 6.39 billion euros by 2025 - and that without new taxes. "I don't think it will work in the short term without revenue-side measures"

Experts: Budget Consolidation Without Revenue Measures Difficult

Johannes Holler from the Fiscal Council Office also expressed skepticism: Saving the 6.39 billion purely on the expenditure side by 2025 "seems extremely difficult" - because apart from the climate bonus "and perhaps the educational leave" there are hardly any opportunities to raise large sums, he said on Ö1 radio. The abolition of the climate bonus would bring in 2.3 billion euros, that of the educational leave a maximum of 300 million. But even these millions are doubted by Holler, because many applications have already been approved.

According to the expert, a lot could be gained if the family bonus were to be abolished - namely 1.2 billion euros. However, he said, "it is not to be expected that the ÖVP and FPÖ, as family and worker parties, will really abolish the family bonus."

Many Cost-Cutting Measures Would Require Lead Time

Many other potential cost-cutting measures would require legal changes, which would be associated with lead times and deadlines. This would mean that only a small part of the actual savings potential could be implemented by 2025. This applies to possible savings on pensions, measures regarding bracket creep or also when cutting climate subsidies.

If a future blue-turquoise government were to abolish the climate ticket, according to Holler, this would likely have the effect that from the moment of announcement, all those who had considered such a purchase for 2025 would immediately bring it forward. This would make the overall impact relatively small. The Fiscal Council office assumes that without a substantial part of tax increases, it will not be possible to consolidate the budget this year, according to Ö1.

Abolition of the Climate Bonus "Not Entirely Unproblematic"

Schratzenstaller commented on the idea of completely abolishing the climate bonus, saying she sees it as "not entirely unproblematic". While it would be justified to abolish it where there is "certain overcompensation" of CO2 taxation (for which the climate bonus was intended). From Schratzenstaller's point of view, it would also be justified to "not consider the higher incomes with the climate bonus". But it would of course be a "bitter pill to swallow" that the lower incomes would no longer be relieved of the burden of CO2 taxation.

In response to statements by FPÖ leader Herbert Kickl, who wants to abolish tax privileges and thus raise funds, the expert said there are a "whole range" - such as climate-damaging subsidies like the diesel privilege, commuter subsidy or company car privilege. Abolishing climate-friendly privileges, on the other hand, would be "not so clever", according to Schratzenstaller. She also pointed out exceptions to VAT, "which are not justified". There is "quite a bit to be gained" here, about 1 billion euros, she said.

Who will feel the budget consolidation the most is currently "not at all assessable," as the details are not known. She views the plan to consolidate the budget without an EU deficit procedure critically: "I think at the very beginning of the government term - when people come together - a signal was to be sent that one does not want to take the easy way out." From a cyclical perspective, however, the possibility of a deficit procedure would have been "the more sensible option".

(APA/Red)

This article has been automatically translated, read the original article here.