30. 06. 10. - 12:00

IMF wants less spending instead of new taxes

The International Monetary Fund (IMF) has appealed to the Austrian government to use the current upward trend of the economy to get the country’s budget in order.

IMF expert Claire Waysand said today (Weds) she did not see a lot of potential for new or higher taxes.

"Taxation levels are very high in Austria, especially taxes on work," she explained, adding that the coalition of Social Democrats and the conservative People’s Party (ÖVP) should cut their spending instead introducing new taxes.

ÖVP Finance Minister Josef Pröll however stressed recently the planned bank solidarity tax would come into force next year. SPÖ Chancellor Werner Faymann announced he hoped the government would rake in an extra 500 million Euros by confronting the country’s bank institutes with this new taxation. He said the tax was adequate since the government paid billions of Euros of state aid to struggling banks last year.

Waysand said the IMF expected the Austrian economy to grow by 1.5 per cent next year. She explained a dramatic drop could be ruled out and appealed to the country’s political decision-makers to organise Austria’s healthcare and social benefits system more accurately to act more efficiently and spend less.

The IMF expert pointed out that the Austrian budget deficit is expected to reach 4.74 per cent this year, while its state debt makes 70 per cent of the overall gross domestic product (GDP). These announcements mean Austria is in a financially better position than most other European Union (EU) member states.

Waysand claimed the coalition must find ways to reduce the deficit to ensure it does not exceed three per cent of GDP in 2013. Austria’s 2009 budget deficit reached 3.5 per cent after just 0.4 per cent in 2008 and 0.6 per cent in 2007.

She stressed the main focus must be on cutting expenditure as she saw "little range" for new taxes.

Faymann and Pröll agreed to present detailed 2011 tax and budget plans in autumn – later than any government before. Opposition chiefs branded the decision – which was also criticised by SPÖ parliamentary president Barbara Prammer – a "political scandal".

Freedom Party (FPÖ) leader Heinz-Christian Strache and Greens chief Eva Glawischnig claimed the SPÖ-ÖVP coalition were trying to avoid revealing its social benefits cut plans ahead of the provincial elections of Styria (September) and Vienna (October).

Glawischnig said she feared the government’s measures would penalise the poor, while Strache and Alliance for the Future of Austria (BZÖ) boss Josef Bucher opposed the decision to contribute around 2.3 billion Euros in the international rescue bid for ailing Greece.

Faymann meanwhile pointed out that the government will not raise value-added tax (VAT) over fears such a decision would dampen consumer spending.

Austrian Trade Union Federation (ÖGB) chief Erich Foglar and left-wing SPÖ officials suggested cutting down on speculative bank deals which put thousands of jobs at risk instead of considering pay freezes.

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