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Felderer 'disappointed' as government eyes up tax hikes
A leading economist has criticised the government for making tax hikes an essential part of its upcoming savings package.
Reports have it that the Social Democrats (SPÖ) and the conservative People’s Party (ÖVP) intend to introduce certain tax increases and some new charges to restore the public budget. The coalition allegedly plans to give tax measures a share of one third in the new austerity package. Talks about the set of fiscal actions has reached the final phase, SPÖ State Secretary Andreas Schieder confirmed on Monday.
Bernhard Felderer, who heads the Institute for Advanced Studies (IHS) and the government’s State Debt Council, admitted today (Weds) he was "disappointed" if claims that tax increases would play such a crucial role. Felderer told Die Presse today the government coalition would be better advised by confronting people earning 180,000 Euros or more a year with an obligatory but temporary solidarity contribution instead.
Lower Austrian ÖVP Governor Erwin Pröll spoke out in favour of such a measure before. ÖVP Vice Chancellor Michael Spindelegger reacted by appealing to all negotiators to keep focusing on creating an overall concept. Spindelegger said his party was interested in lowering the debts by carrying out structural reforms. He admitted that his team would discuss the possibility of higher taxes with SPÖ representatives at some point – but only after an agreement about reforms was reached.
The SPÖ approves ideas of a higher income tax rate for people with comparably high salaries. The left-wing party of Chancellor Werner Faymann also tries to convince the ÖVP of a tax on assets. The Social Democrats are expected to suffer a defeat as far as this issue is concerned. The government parties are tipped to agree on higher taxes on profits made by selling real estate instead. A reintroduction of inheritance taxation will most likely be vetoed by the ÖVP.
Felderer said today the government must show some real effort in checking the potential for savings as far as subsidies were concerned. The economist – who will resign as head of the IHS in June – pointed out that 25 per cent of the overall expenditure of Austria’s provinces were subsidies on the public sector and the private economy.
The ÖVP wants to slash subsidies – which reached a record level of 18.5 billion Euros in 2011 – by around 15 per cent each year until 2017 to meet the European Union’s (EU) criteria on members’ budgets by 2020. The opposition Freedom Party (FPÖ) of Heinz-Christian Strache approves attempts to lower such spending. Asked what else could be done, Strache appealed to the coalition to consider the suggestions of the Audit Office (RH) which recently presented a list of 599 possible measures.
RH President Josef Moser pointed out that none of the proposed steps would slow down the domestic economy’s growth. He said all possible measures were about raising the state’s service efficiency. Strache called for new elections after Faymann and Spindelegger reacted critically to rating agency Standard & Poor’s (S&P) decision to downgrade Austria. The FPÖ leader said SPÖ and ÖVP were to blame for the country’s current difficult financial and economic situation.
Josef Bucher, head of the Alliance for the Future of Austria (BZÖ), warned from an upcoming "tax avalanche". He claimed the government was not courageous enough to carry out substantial reforms. The BZÖ decided to abstain from supporting the coalition’s debt brake draft bill after the SPÖ failed to stop calling for higher taxes.
Austrian Times
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