The right-wing Freedom Party of Austria (FPÖ) and the centre-right People’s Party (ÖVP) have reached a deal on bringing Austria’s budget deficit back within the European Union’s limit.
The two parties began talks to form a government last week, and the task of balancing the budget was the main priority, as Austria faces a so-called excessive deficit procedure by the EU. This means the country could be fined if it does not bring its 4% budget deficit to below 3% over the coming years.
“What I can rule out is an increase in taxes for the masses, so no increase in value-added tax, no increase in the fuel tax, nothing being taken back, so to speak, in the area of corporations tax,” Herbert Kickl, the leader of the FPÖ, said on Monday, January 13th.
Anyone who claims that things will be better with new taxes is “not a doctor who cures Austria, but a charlatan,” Kickl added.
Presenting the budget plan with ÖVP head Christian Stocker at a press conference, the two leaders said they had mainly agreed on spending-related measures to save about €6.3 billion this year, or about 1.7% of GDP.
The largest chunk of these savings will be a €3.2 billion reduction in subsidies, of which the so-called Climate Bonus—a payment to individuals to compensate for rising fossil fuel costs—alone accounts for €2.3 billion.
Both parties have been sceptical of the EU’s radical climate policies, with the FPÖ vowing in its election manifesto to oppose the European Union’s Green Deal, withdraw the ban on internal combustion engines, bring affordable energy to households, support farmers, and stop harmful climate policies that “destroy our economy, industry, and competitiveness.”
As we previously reported, Herbert Kickl was given the task of trying to form a government with the ÖVP after the coalition talks between the People’s Party, the Social Democrats, and the liberal NEOS party broke down.
The Freedom Party won the elections last September but did not gain enough seats in parliament to be able to govern alone. All the other parties shunned it, and the country’s president, Alexander Van der Bellen chose to ignore the results and instead tasked the ÖVP with forming a government.
The ÖVP has much more in common with the FPÖ than with the leftist forces. The two parties are already in coalition in five of Austria’s nine states. Both of them disagree with raising taxes, and both want a stricter asylum policy with the aim of stopping illegal migration.
A plan to avert the excessive deficit procedure by the EU could have been outlined much sooner had the ÖVP and other parties not wasted three months with coalition talks that were doomed from the start.
The FPÖ and the ÖVP said they would hammer out the budget figures in greater detail and present them to the public at a later date, but caretaker finance minister Gunter Mayr will now inform the European Commission of the agreement.
