High tax revenues

Government spending has risen sharply again

Finance Minister Magnus Brunner recorded a 14 percent increase in government spending in the first half of the year.

(Bild: APA/ROBERT JAEGER)

Government revenue continues to bubble up, but debt is also soaring due to increased expenditure. The treasury accumulated an additional 13.8 billion euros in new debt in the first half of the year, and the plan is to reach a maximum total of 20.9 billion euros by the end of the year.

There can be no question of low tax revenues: income tax revenues rose from 15.7 billion euros to 17.1 billion euros - despite the abolition of cold progression. But this is not enough to plug all the holes. "The main reason for the increase in expenditure is pensions," says Dénes Kucera, economist at the liberal think tank Agenda Austria. He also sees this as the biggest lever.

Additional expenditure on pensions
Expenditure rose by 14 percent. The increase in expenditure on pension insurance is 17 percent, and around 10 percent for civil servants. And the chunk is likely to get bigger in the coming years. "High adjustments and demographic changes are clearly leading to this," says Kucera. On the other hand, there are fewer people in employment to finance the system.

(Bild: Krone KREATIV/stock.adobe)

"The measures adopted in the past to combat the various crises are now reflected in the implementation of the budget. There were no surprises here," according to the Ministry of Finance.

Expenditure is also rising in other areas, apart from pensions. For example, the path taken in climate policy is costing the treasury a lot of money, with over 1 billion euros in additional expenditure in the first half of the year. According to the Ministry of Finance, the lion's share of this is accounted for by subsidies for renewables. 

More unemployment costs the state money
Higher unemployment is also having an impact in that the state is spending more on unemployment benefits and the like. "A reform with a degressive unemployment benefit model would make sense here," says Kucera. This would also increase the incentive to return to work more quickly.

Pensions carry the most weight. And if there are no reforms, this chunk will get bigger and bigger.

Agenda-Austria-Ökonom Dénes Kucera

The tax authorities also recorded high additional expenditure on federal assets (+59.1 percent). This mainly relates to the electricity cost subsidy and transfers to COFAG, which are financed from this budget item. Subsidies also remain at a high level. "In future, subsidies should be more targeted. Even if they did not increase significantly in the first half of the year, they remain at a high level," says Kucera, who advocates an end to the "watering can" approach.

Ministry of Finance confident despite high debts
As a result of the 13.8 billion euro increase in debt, the finance minister has already "used up" two thirds of his planned debt of 20.9 billion euros, meaning that the financial balance must be lower in the second half of the year. According to the Ministry of Finance, the budget is still on track. In the first half of the year, the financial equalization to the federal states in particular had a significant impact.