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,_it_was_announced_yesterday._Pictured:_SPÖ_leader_Werner_Faymann. "The government plans to present its austerity package this evening (Fri), it was announced yesterday. Pictured: SPÖ leader Werner Faymann.")
RSS Feed Business11. 02. 12. - 10:00
Coalition unveils 26.5 billion savings packet
After lengthy discussions Austria's coalition government has agreed on a plan to save 26.5 billion euros.
Three quarters of that total will be raised through spending cuts and the other quarter through tax increases including a tax on the rich.
Chancellor Werner Faymann from the social Democrats described it as socially balanced and that he was pleased it had been achieved without simply increasing mass taxes such as the VAT on food products.
The discussions that were long and drawnout were given an added urgency after Austria lost its AAA rating at Standard & Poor’s last month. With the coalition of social Democrats and the conservative People's party aiming to comply with balanced-budget rules agreed among euro-area leaders last month.
The country’s budget deficit will fall to 0.6 percent of gross domestic product by 2016, from 3.1 percent last year, according to the plan. Debt, which amounted to 72.2 percent of GDP in 2011, will widen to 75.4 percent in 2014 before narrowing to 71 percent in 2016.
Finance Minister Maria Fekter said that she hoped the measures will allow Austria to regain its AAA rating at S&P.
The plan includes 7.26 billion euros of savings because of stricter rules for early retirement and lower pensions, about 2.5 billion euros saved on pay and hiring freezes for civil servants and about 440 million-euro tax surcharge for top earners.
Additional measures include lower investments in infrastructure, health care and at the state-owned railway company, an end to double subsidies from regional and federal agencies and closing tax loopholes including an exemptions for real estate gains and tax benefits for gasoline acquired by farmers.
The measures also include potential revenue of a tax on financial transactions within the European Union as of 2014 and taxes on undeclared Austrian funds in Swiss accounts, which should be levied on the basis of a treaty that still needs to be agreed on with Switzerland.
Austria’s economy may continue to stagnate in the first half of this year, Wifo economic research institute, which compiles gross domestic product figures for the Alpine republic’s government, said yesterday.
While Austria’s economic slowdown this year will be more abrupt than forecast earlier, the country is unlikely to see more than one negative quarter this year, Wifo said Dec. 21. Gross domestic product is expected to rise 0.4 percent, the group said, down from a September prediction of 0.8 percent growth, and 1.8 percent in July.
Austrian Times
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products coalition rating savings gross social billion acquired domestic quarters Democrats euros government rsquo discussions Austria taxes percent Wifo balanced
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