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Ministry of Finance “made a mistake”
“The macroeconomic effects of the 2020 Economic Strengthening Law shown in the WFA (Impact Oriented Impact Assessment) are clearly too high because unrealistic assumptions have been made for the boost in consumption,” says the statement that the APA has And about what Rush reported.
For example, households would be relieved from the tax cut by 8.3 billion euros from 2020 to 2024, but the WFA represents an increase in value added corresponding to an increase in private consumption of 11 billion euros.
Therefore, starting in 2021, Austrians would have to spend more than one euro for every euro of aid. This “suggests that the BMF may have made a mistake entering the values in the WFA IT tool,” according to the budgeting service.
the Income tax relief This year it amounts to 1.38 billion euros, of which almost half (46 percent) corresponds to the richest third of Austrian households. About half of the amount is likely to be used for consumption.
Through One-time payments for families Disposable income is likely to increase by 665 million euros this year. Given that the poorest third of households here receive a higher than average share, 60 percent of the relief should go to consumption.
the One-time payments for unemployed increase disposable income by € 181 million this year (if it is increased by € 200 million). Two thirds of this should lead to private consumption, according to the response to the query.
For him Investment promotion According to the current status, the government is distributing an investment premium of two billion euros. It is likely to increase as this measure has been very well received by businesses. With the two billion euros currently estimated, the government estimates that 20 billion euros in investments should be “activated”.
However, the budgeting service assumes that only two billion euros of this are actually additional investments that would not have been made without the premium. All the rest are deadweight effects, that is, the promotion of investments already planned and pull-forward effects, so that investments are made ahead of schedule.
“A meaningful assessment would examine what proportion of the financed investment was actually made or advanced because of the premium,” suggests the budgeting service.
The measures cost 11.4 billion euros
Without the measures examined here, Austria’s economic output would be 0.7 percentage points lower this year and 1.2 percentage points lower in 2021 than in the WIFO forecast. It should be noted, however, that this growth will be financed by a larger deficit. Any counter-financing measure that is decided in future years will again cushion the economic effect.
The government assumes that the measures will cause direct budgetary costs of around 11.4 billion euros from 2020 to 2024, but that they will be offset by indirect positive effects that will lead to self-financing of 64 percent of direct costs. “The relatively high degree of self-financing is a consequence of overestimated value-added multiples … and from a budget service perspective represents an upper bound,” says the analysis.
Only 16 percent of the low-income package
In general, Parliament’s budget service assumes that the richest households will benefit more from the measure than the poorest. Therefore, the fifth part of the households with the highest income benefits from 23 percent of the positive effects, mainly because they benefit the most from the lower income tax rate.
On the other hand, only about 16 percent of the total volume of aid is attributable to the lowest-income fifth of households, because many people only benefit to a limited extent from the reduction in the base tax rate due to insufficient income. and this is only partially offset by the increase in the SV bonus.
