EcoAustria-Director Advocates for Budget Savings

When it comes to the budget, EcoAustria director Köppl-Turyna sees enormous potential, especially in pensions. "The need for consolidation cannot be achieved without further structural reforms," she said in an APA interview.

EcoAustria Director Advocates for Savings in Benefits and Subsidies

Köppl-Turyna substantiates her demands with a "Policy Note" developed by EcoAustria, a publication on current economic issues. As part of this, the effects of possible consolidation measures on the economy and long-term value creation were examined based on current calculations by the Fiscal Council. Consolidation is "in any case not a nice thing for the economy," said the EcoAustria boss. This means that regardless of whether the consolidation is on the expenditure or revenue side, one must expect "negative economic effects" in the short term.

Expenditure-side consolidations, especially through transfers and public consumption, promise a significantly higher probability of success than revenue-side consolidations, such as increases in corporate and income tax. Transfers include all possible benefits and subsidies, including pension expenditures. Overall, around 3 billion euros in 2025 and around 5 billion euros in 2026 could be generated through expenditure-side measures, half of which would be in pensions. This primarily refers to adjusting pensions below inflation. Other specific expenditure-side measures would include the abolition of educational leave and part-time work for older people, and a suspension of the indexing of family allowances and childcare money.

In the area of revenue-side measures, according to EcoAustria's calculations, only 1.4 billion euros for 2025 and 1.5 billion euros for 2026 are achievable. Specifically, this includes the abolition of the commuter allowance and the flat-rate taxation of company cars, and the VAT exemption for photovoltaic systems.

Revenue-Side Measures as "Ultima Ratio" for EcoAustria Director

While the economic impact of consolidation measures in the area of pension expenditures is unclear, they could strengthen the labor supply and value creation in the long term. "Revenue-side measures are less likely to be associated with successful consolidation, so they should only be used as a 'last resort'," says Köppl-Turyna. In the case of wealth-related taxes, a property tax increase is a sensible measure in the long term, as there is "no negative investment effect" - unlike income tax increases.

Furthermore, structural reforms are essential. Huge efficiency potentials lie, for example, in public administration as well as in the education and health sectors. "The money is not flowing where it is needed," says Köppl-Turyna. As an example, she mentioned the health care system. Austria has a "costly system that focuses more on repairs rather than prevention" compared to other countries. In the long run, preventive measures would prove to be more effective from an economic point of view. In general, there are huge differences in the expenditures of the federal states, also in the subsidy area. "This needs to be addressed," says the economist. In all this, politics must rely on a "credible and clearly communicated consolidation path."

(APA/Red)

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