“Inflation will be significantly higher and last longer than expected. Therefore, in addition to the current inflation adjustment measures, structural changes must also be considered,” said Finance Minister Magnus Brunner (VP) in an interview with journalists.
This also means examining the adjustment of the cold progression and its effects as provided for in the government program, i.e. the fact that taxpayers slide into higher tax brackets and thus have less of a salary increase.
He had agreed with the social partners that corresponding facts and figures would be collected together with experts from the Ministry of Finance. Concepts are to be developed on the basis of these numbers, including an automatic mechanism to abolish cold progression, said Brunner when asked.
Inflation brings budget billions
The current crises are having a massive impact on private finances, but also on public budgets. While companies can hardly maintain their prices and private individuals have to face a real loss of assets due to inflation, the Minister of Finance is bubbling with money because of the higher VAT and wage tax revenue. According to Agenda Austria, it should be around eleven billion euros.
Brunner counters that the eco-social tax reform of 2022 and 2023, the cost-of-living adjustment, the refugee aid, the Covid precaution, but also the development of a strategic gas reserve would also amount to around eleven billion euros. Brunner wants to stick to the eco-social tax reform. The abolition of the cold progression, through which the taxpayers finance each tax reform themselves, should be given special attention.
Balanced budget only in 2026
Brunner also wants to adapt the current budget. Because the growth forecasts are constantly being lowered. The reduction in the growth rate for 2022 from 4.9 to 3.9 percent alone costs one billion euros in revenue. For this year, the budget deficit will increase from two to around three percent of gross domestic product, the debt ratio will not be 79 but 80 percent of GDP. The path to a balanced budget will not lead to the goal in 2024, but only in 2026, says Brunner.
Source: Nachrichten
