VIENNA: As the government of Austria has planned to limit the scope for a tax reform, Austria might on the edge of missing its budget target for the next year.
The Alpine republic won’t reach a structurally balanced budget, which is a deficit of less than 0.45 percent of gross domestic product adjusted for cyclical effects, before 2017, missing the government’s goal by at least a year, according to five economists surveyed by Bloomberg. Two of the economists predict the target won’t be met before 2020.
Austria is trying to cut taxes while slow exports weaken economic growth and costly bank rescues inflate debt. The country lost its second AAA rating last week when Fitch Ratings said debt levels have risen too much for a top grade.
Even so, relieving low-income taxpayers and reducing one of Europe’s highest tax burdens is the top priority of Social Democrat Werner Faymann’s at times awkward coalition with the conservative People’s Party. Without a deal,
“the government probably has no right to exist further,” according to Vice Chancellor Reinhold Mitterlehner.
“The political pressure has risen in the last couple of days,” said Stefan Bruckbauer, chief economist at UniCredit Bank Austria AG.
The downgrade of Austria’s credit rating and the debate about Greece’s debt “have brought the topic back to the foreground,” he said.
