The abolition of cold progression is already starting to show up in the budget. So far this year, income taxes have grown much slower than inflation. Finance Minister Magnus Brunner (ÖVP) is taking the numbers as an opportunity to issue a warning.
The high level of inflation is reflected in the federal budget, in addition to additional payments for sales tax, in particular through substantial additional payments in the area of pensions and personnel and through payments for support measures such as the energy cost subsidy.
Payments for covid crisis management continued to fall, interest expenses continued to rise, almost doubling from the same period last year.
Sales tax with strong dynamics
At 15.0 billion euros, adjusted premium income was 0.7 billion euros (plus 5.0 percent) higher than last year, mainly due to higher EU transfers (plus 0.3 billion euros) and higher tax revenues (plus 0.3 percent). 2 billion euros in taxes after deduction of the profit share), with only weak growth in payroll taxes due to the abolition of cold progression, especially compared to the wage agreements last fall (plus 2.3 percent compared to February 2022) . The sales tax, on the other hand, shows strong dynamics due to inflation (plus 13.6 percent).
Higher spending on economic development and national defense
Adjusted benefits amounted to 16.3 billion euros, which is 2.3 billion euros (plus 16.4 percent) higher than last year. This development is mainly due to higher federal refinancing costs due to higher interest rates (plus 0.8 billion euros) and higher pension payments, mainly due to the 2023 pension adjustment including direct payments. In addition, higher economic subsidies (eg energy cost subsidy and investment bonus) and extra investments in the field of national defense contributed to the increase in benefits.
At the end of February 2023, the net financing balance of the federal government amounted to minus 1.2 billion euros, which is 1.6 billion euros more negative than in the same period of 2022.
Brunner calls for a return to a sustainable fiscal policy
According to Finance Minister Magnus Brunne, the expenditure during the crises and the necessary support could be met because Austria pursued a prudent fiscal policy for years. His job as finance minister is now to monitor long-term developments and the budget. That is why he advocates a return to sustainable fiscal policy – also for everyone else, especially for the highly indebted euro countries.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
