Austria Plans Budget Revamp for Sustained Response to Inflation
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Austria is preparing its longer-term response to faster inflation.
The government in Vienna will start policy discussion on more lasting measures to temper the impact of accelerating consumer prices, Finance Minister Magnus Brunner told reporters late Tuesday.Â
Any steps will aim to redistribute some of the extra tax income that's a result of faster inflation, and will be presented during the summer months. They come on top of 4 billion euros ($4.3 billion) worth of one-time relief already announced this year.
The plans show greater realization among European officials that hot consumer prices will drag on for longer. They also suggest urgency to quell voter discontent in an area that's becoming the central question of political debates. Austrian inflation hit 6.7% last month and is predicted to average 5.6% this year, according to the International Monetary Fund's latest forecasts.
Austria may consider changes to income tax, including the brackets in the country's progressive system, according to Brunner. Faster inflation usually leads to higher wages, pushing more taxpayers into higher tax rates.
The government also adjusted its 2022 budget deficit goal to 3% of economic output from 2% due to bigger expenditures, and as the war in Ukraine lowers the growth outlook.
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