The Austrian State Budget – Public Finance and Taxes
A budget is a financial forecast of expenditures and revenues for a given period of time.
A budget is intended to promote the economic growth of a country and therefore, budgets are hotly disputed in parliamentary sessions.
Drawing up (Austria):
– Minister of Finance proposes a budget draft for the upcoming year
– If the government approves à budget draft is presented to the National Assembly
– Minister of Finance holds budget speech and the draft will be discussed in Parliament
– If it passes the debate à budget draft becomes a valid law
– Audit Office is then supposed to watch the development of the budget prediction and hands in a final report at the end of a budget period
– Economic interests push and pull to obtain benefits and avoid burdens
– The social element is the redistribution of revenues according to public needs
Major source of revenues for the Austrian state budget are taxes:
– Direct Taxes (Personal income tax)
– Indirect taxes (Value added tax)
To be paid by all persons whose place of residence or regular domicile is in Austria:
– Employees and pensioners pay wage taxes
– Self-employed persons pay income tax
– Subsistence level remains tax-free (Below €10.000 annually)
The income tax system in Austria is progressive à the higher one’s income, the higher the percentage of taxes one has to pay
Value Added Tax (VAT):
– The VAT is a tax which is levied (erhoben) at each stage of production based on the value-added to the product at the stage (End-consumers cannot recover VAT on purchase / Businesses can).
A Survey of Austria´s Economy
Indicators of Austria´s Economy:
Most important economic indicator is the GDP (Measures total value of goods and services produced over a certain period of time).
– Change in GDP is called economic growth (Both positive and negative!!!)
– Alteration in GDP has an impact on the price inflation of a country, too
Importance of the GDP:
– It is used to determine the economic change of a country within a certain period of time
– It is used to compare economy sizes throughout the world
– It is used to compare relative growth rates of economies throughout the world
Calculation of the GDP:
– Either by adding up the expenditures on goods and services at the time of sale
– Or by taking out the effects of inflation (Only the final product is counted)
The Gross National Product (GNP), on the other side, is calculated by adding up all produced goods + the value of goods imported – the goods exported.
Austria´s National Account:
– Is divided into GDP, National Income and Available Volume of Goods and Services
– Is the result of Austria´s economic circle (No Output without Input!!!)
Austria´s Consumer Price Index:
– CPI measures how much the price of a certain product range has changed over a given period of time (Approximately 800 goods and services)
– Besides the CPI the Harmonized Index of Consumer Prices (HICP) has been introduced to make the different CPI´s comparable (ECB tries to keep HICP under 2%)
Austria´s unemployment rate:
– Austria unemployment rate ranks third after the Netherlands and Denmark with around 4%
Unemployment in general is a big problem for the economy and the society of a country, as unemployed people depend on public grants (governmental aid) and suffer from their low social esteem (Young adults and expectant pensioners suffer most from unemployment).