Budget policy – “Saving for bad times”

It’s a tidy sum of money that the government is handing over here to offset the current inflation. The third anti-inflation package presented by the black-green government on Tuesday is worth six billion euros. As a reminder: Almost everyone gets a climate bonus of 250 euros and a one-off payment of another 250 euros. Social benefits and family allowances will be adjusted to inflation, 300 euros for low-income households, cold progression will be partially abolished, companies will receive energy subsidies. In addition, the city of Vienna wants to relieve a large part of its households because of the rising energy costs.

If you add up all the relief packages, the federal government has already spent a total of 10 billion euros this year to cushion the current energy crisis and persistently high inflation. According to the government, the relief will add up to 28 billion euros by 2026. While the package, or at least certain parts of it, has been praised by economists but also by the union, there has also been criticism. Too much money for too many, including households that don’t really need it urgently.

“Many parts of the package are very good,” says Christoph Badelt, President of the Fiscal Council, to the “Wiener Zeitung”. However, he points out that this is a very broad relief, right down to income groups that do not need it now, at least due to the crisis.

counter-financing vague

However, the question of counter-financing was only answered vaguely by the government. According to Finance Minister Magnus Brunner (ÖVP), a third of this should be financed through higher consumption. In addition, the state benefits from higher VAT revenues precisely because of the high inflation. This means that around half of the package is supposed to finance itself. “To be honest, I can’t imagine it. But I don’t yet know the exact calculations behind it either,” says Badelt. In principle, around 25 to 30 percent of the reduction in tax revenue is self-financing. In this case it could be a bit more because of the high inflation.

restricted scope

“Our request to the government would be to save the current inflationary gains for harder times,” says Badelt. There is no telling when the war will be over. In addition, the inflation is not homemade, but imported. Most of the inflation is due to rising energy prices and the government cannot currently influence this. “It can only alleviate the consequences.”

Badelt says about the partial abolition of cold progression: “I was never against it, I just said again and again that this would significantly limit the scope for other measures.” In the course of the package, the national debt will initially increase – by how much is currently unclear. However, Badelt emphasizes that this is not a problem as long as the economy is growing. “And now we don’t see a recession.”

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