Austria's Minister of Finance: "I see myself on the same page as Germany"

Minister, you recently presented your first state budget.

One reaction was: Does the new debt have to be so high despite good tax income?

Gerald Braunberger

Editor.

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Heike Goebel

Responsible editor for economic policy, responsible for "The Order of the Economy".

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Some of the draft budget contains measures to deal with a crisis that is reaching deep into small and medium-sized businesses.

That's why not helping is not an option for us.

But we have also created the right conditions to make investments out of the crisis.

The focus here is on military and social security, security of supply and the transformation of the Austrian economy.

And we have decided to stick to our tax reform in order to strengthen purchasing power and become a more attractive location.

The British government has just been punished by the financial markets for such a tax policy.

We are proceeding more cautiously, the implementation has already started this year.

And with the abolition of cold progression, through which we completely forgo tax inflation gains, we are finally implementing a requirement that has been in every government program for 40 years.

Are you still sticking to the idea of ​​reducing capital gains tax?

Yes, we stand by that.

That would be a clear signal to the capital market because we want to make it easier to invest in securities over the long term as a precautionary measure.

But we still have to convince our coalition partner of this measure.

How big is the pressure of the population on the government in this crisis?

We try to help and to preserve social peace.

We can do that too.

However, it cannot be the task of the state to compensate 100 percent for all consequences of crises.

However, I would prefer a closer alliance between all parties.

Do you see the danger of a wage and price spiral for Austria?

The danger certainly exists.

The government does not interfere in the social partners' wage negotiations, but we can send signals.

For example, we have made it possible for companies to pay premiums up to EUR 3,000 tax- and duty-free, and the abolition of cold progression also helps.

In the current situation, can fiscal policy help combat high inflation?

In principle, fighting inflation is, of course, the task of the central bank.

As nation states, we can ensure that our policies do not have an inflationary effect.

For example, we introduced an electricity price brake that sets a low price of 10 cents per kilowatt hour for consumption of up to 2900 kilowatt hours per household.

Economists like Gabriel Felbermayr criticize that half of the households no longer have an incentive to save electricity.

The basic consumption was set very generously.

One can criticize the details of the model, but in principle the economists agree with the model.

Fine-tuning crisis measures is generally very difficult.

How about the price of gas?

One criticism of Germany is that the federal government is forcing its European partners into a subsidy race with its package of over 200 billion euros.

In the case of the German package, one must take a serious look at what is included in the 200 billion, for example other measures such as extending the life of nuclear power plants.

However, from a European perspective, going it alone with gas makes little sense.

It would be more important that we receive proposals for a joint solution from the European Commission.

In the meantime, there has been movement in the dossier.

The previous proposal to siphon off excess profits from companies tends to combat the symptoms rather than the cause.

Do you support government intervention in the gas market?

In principle, I am not a fan of interventions, but the current situation is exceptional.

In the short term, we need ways to lower prices.

One possibility would be a Europe-wide expansion of the Iberian model, which provides for a price cap for the gas used to generate electricity.

Interest expenditure in the Austrian national budget will double between 2022 and 2023. How do you intend to reduce the high national debt again?

It's true that fighting the crises is increasing our debt level.

However, we are optimistic that the debt ratio, i.e. the ratio of government debt to gross domestic product, will fall from 78 to 72.5 percent by 2026.

We must return to a sustainable level of debt in the medium term in order to create fiscal leeway.

This applies not only to Austria, but also to Europe.

I see myself on the same page as Germany.

Does that also apply to considerations from other countries to introduce further debt funds in Europe?

In any case, these ideas have not yet met with support in Germany.

We also see that like Germany.

My relationship with Federal Minister of Finance Lindner is very good.

What do you say to the accusation that Austria always demands a sound financial policy from other countries, but does not stick to it itself?

That is not right.

Of course, the current crisis calls on the state, but we have a clear path for the medium-term consolidation of our finances.

Next week, the European Commission intends to provide orientations for a reform of the Stability Pact.

What do you wish?

I hope that the rules of the Stability Pact will be observed.

You can discuss reform, but I don't see any major need for change.

The rules are flexible enough.

However, they could be simplified.

And it needs better enforceability.