Protagonist on Doubled Budget: "Not Following Renovations Suggested by Jux and Tollerei"
Austin's Back in Black: Finance Minister, Markus Marterbauer, Brings Austerity Back into Favor
Say hello to black budgeting! Austria's Minister of Finance, Markus Marterbauer, unveiled the nation's 2025 and 2026 budget, which has a serious focus on trimming the fat, reigning in spending, and steering the economy back to fiscal health.
Austria's financial situation isn't looking too peachy these days. The country's struggling to keep the budget deficit from skyrocketing if it doesn't manage to save a whopping €6.4 billion this year and €8.7 billion next (2026). The good news? Even with these belt-tightening measures, the outlook isn't all doom and gloom.
Marterbauer, who initially promised an investment-heavy budget, swiftly adopted a more assertive tone, emphasizing the need to get the nation's fiscal house in order. "We aren't performing a financial face-lift for fun—Austria's issues are concerning, but they aren't a reason to freak out," the finance minister asserted.
It's been a tough go for Austria in recent years. With a dismal financial situation, a gloomy economic climate, and immense challenges in areas like education, demographics, and more, Austria's starting position is far from enviable.
The budget deficit this year is 4.5 percent, down from 4.7 percent last year. To continuously decrease this value to three percent by 2028, ensuring Austria once again meets the EU Maastricht criteria, austere measures will be taken.
Without austerity measures, Austria's debt-to-GDP ratio would increase from the current 84.7 to up to 87 percent. This jump is due to economists expecting minimal economic growth in the upcoming years, and higher debt leading to higher interest expenses, which would increase by almost one percent of GDP, or up to five billion euros, from 2024 to 2029.
Austerity: It's Now or Never
Marterbauer posed a question that's been on everyone's lips lately, "Is now the time for budget consolidation? Despite the dimming economy and rising unemployment, the timing isn't great for budget cuts and tax hikes. Yes, the timing might not be ideal, but it can be done. With a little grit, Austria can make it happen."
This budget, according to the Minister of Finance, should prioritize transparency to uphold credibility and traceability, aim for a fair distribution, and provide clarity to the population about the goals of saving. The main objective, however, is to kick-start the economy, especially private consumption, which stands at a colossal €262 billion and has seen only minimal growth despite increasing real incomes.
No Pain, No Gain: Key Austerity Measures
Banks
Banks have pocketed handsome profits in recent years, and now they'll be contributing €350 million through the Stability Pact to the budget.
Real Estate Transactions
If you're thinking of selling your property, get ready to pay up. Significantly higher taxes will apply to real estate transactions moving forward.
Top Tax Rate
The tax rate for annual income over one million euros will see an extension, and the last third of the cold progression will be made budget-effective.
A Bird's Eye View of the Austerity Package
The main points of the austerity package are well-known, with two-thirds of the savings on the expenditure side and one-third on the revenue side. Keep in mind that the climate bonus, which is being slashed, is being accounted as expenditure, a contentious move as it was intended to cushion the CO2 tax.
- Revenue-side Savings bring in €1.04 billion this year (2025) and €2.2 billion in 2026. The biggest chunks are tax relief measures and contributions from energy companies and banks. The abolition of cold progression is on track to bring in around €440 million from 2026. More than half a billion euros will come from tax increases on gambling and tobacco products, with a 30% hike to the recycling tax.
- Expenditure-side Savings, primarily in subsidies, will yield €1.3 billion in savings this year and €1.84 billion in 2026. Environmental subsidies see the most cuts, with a €557 million reduction anticipated for this year and €820 million for 2026. The government is establishing a subsidy task force with the goal of finding an additional €150 million in savings by 2026. Unfortunately, the free climate ticket for 18-year-olds is meeting its demise.
- Labor Market and Pension Reforms are projected to save €240 million this year and a whopping €650 million by 2026, with the new form of educational leave expected to lead the way. The pension reform and restrictions on low-income side jobs for the unemployed are also contributing to savings.
- Administrative Cuts will save €1.1 and €1.3 billion in 2025 and 2026, respectively. This is achieved through project delays, reducing business trips and printing costs, as well as personnel cuts. The finance minister emphasizes that every department has felt the pinch.
- Social Security is expected to generate a small surplus in the future, primarily due to a hike in the health insurance contributions of pensioners from 5.1 to 6 percent and the E-Card fee increasing from the current €13.80 to €25 next year.
In closing, Marterbauer reiterated that the planned pension system reforms will result in long-term savings of €1.9 billion annually, making them necessary for the well-being of all generations. He reminds us that it's through united efforts that the planned budget changes will be successfully implemented. After all, the road to restoring Austria's fiscal health isn't a solo effort. It's time to buckle up and ride out the austerity wave together.
Here are the sentences that contain the given words:
- "Despite the dimming economy and rising unemployment, the timing isn't great for budget cuts and tax hikes. Yes, the timing might not be ideal, but it can be done. With a little grit, Austria can make it happen."
- "This budget, according to the Minister of Finance, should prioritize transparency to uphold credibility and traceability, aim for a fair distribution, and provide clarity to the population about the goals of saving."
