Tax revenues in Austria are rising, while expenses are growing rapidly

This effect is primarily due to increased tax revenue rather than excessive government savings efforts. Specifically, income increased by 2.2 billion euros (especially in sales and wage taxes), expenses only increased by 1.5 billion euros – this is how the improvement in the budget balance came about.

If you take a closer look at the expenditure side, as Agenda Austria economist Denes Kucsera does, you will notice a well-known trend. The 1.5 billion increase in spending comes largely from pensions, plus additional spending on interest and unemployment insurance. Kucsera to the KURIER: “With a long overdue pension reform, in which the starting age should be linked to increasing life expectancy, we would be in a much better position in terms of the deficit today.”

Hardly any budget flexibility

Income will also increase in the medium term until 2031, but expenditure will grow so strongly that the state’s costs for pensions and interest will de facto tie up the entire increase (see graphic).

For example in 2030: tax revenue this year will be 13 billion euros above the 2025 level. At the same time, the additional spending on pensions (7.8 billion) and interest (4.0 billion) alone will use up almost all of it. This is shown by the projections from the latest strategy report from the Ministry of Finance.

Like the Fiscal Council recently, Kucsera is also calling for structural reforms. He says: “There is simply not enough that has been saved in the budget so far. The largest expenditure items must finally be addressed and pensions are one of them.”