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Austria's austerity package: Massive cuts threaten turbulent times!
Austria is planning drastic austerity measures in 2025 to avoid an EU deficit procedure, including cuts to the climate bonus.
Austria's austerity package: Massive cuts threaten turbulent times!
Austria is facing a financial test: In order to avoid an impending EU deficit procedure, the government is planning drastic austerity measures, such as Kosmo.at reported. The government, known as the “candy coalition”, consisting of the ÖVP, SPÖ and Neos, is canceling the climate bonus and educational leave in order to save a total of between 15 and 24 billion euros in the coming years. This is part of a comprehensive austerity package that, according to Prime Minister Christian Stocker and party leaders, is seen as a necessity in order to get the state finances under control.
A central element is the abolition of the climate bonus, which should enable savings of around two billion euros. From 2026, however, partial compensation for commuters will be offered through a tax deduction. The worst cuts also affect support for education and social projects. The budget will also be improved by the increased bank levy and the extended excess profits tax for energy companies, with these measures together expected to generate revenue of up to 700 million euros per year Profil.at.
Quick measures for the cash registers
The government is not only targeting savings, but also plans to increase tax revenue through adjustments. This makes tax increases that appear necessary at first glance, such as increasing the tobacco tax and abolishing the VAT exemption for photovoltaic systems, necessary. By 2026, fees for public services, such as passports and driving licenses, are also expected to rise by up to 44 percent. The introduction of new levies for foundations and a stability levy for banks show that the government is trying to create a fairer distribution of the burden, even if the exact impact on citizens remains to be seen.
The negotiations are exciting and show the coalition's efforts to find a uniform and broad solution despite the harsh cuts. While coalition parties agree that reform is needed, it remains to be seen how citizens will react to the coming financial changes.