Bucharest University of Economic Studies

Fiscal and Budgetary Policies Project

Austria

FABBV, Third Year

Group 1562
Dinu Andra
Dobre Claudia
 Contents

 Introduction
 Part 1: Fiscal and budgetary policies as they are reflected within the national and
European strategies
 Part 2: Fiscal and budgetary objectives in the field of education, health and social
protection
 Part 3: The macroeconomic stability pentagon
 Part 4: Evaluation of the excessive tax burden by using the Laffer curve
 Part 5: Quantitative analysis regarding the effects of the fiscal and budgetary mix
policies
 Conclusion
 References
 Introduction

The government of Austria is pursuing a sustainable budgetary and financial policy with
the objective of attaining sustainable economic growth and a high level of employment.
It also aims at a sustainable budgetary consolidation and a public debt reduction in the
medium term as its highest priorities. As a result, it follows a three-pillar strategy: a
balanced budget over the business cycle; investments in R&D, infrastructure, education
for promoting growth and employment and structural reforms in the fields of public
administration.

Austria’s strategy includes several reform packages: the economic stimulus packages
including the tax reform; the employment stimulus packages (short‐time work);
structural reforms in the field of public administration, subsidies, pensions and labour
market; the measures to regulate and monitor financial markets and the improvement
of the regulatory framework. In addition, the automatic stabilisers were allowed to
operate freely.

Unlike other EU countries, most of the fiscal stimulus introduced is permanent. Most of
the measures supported long-term growth, but the adoption of the measures increased
the general government deficit and debt to unsustainable levels. Even if Austria entered
the crisis with a budgetary position almost balanced, the significant deterioration in
public finances led to consolidation measures, introduced from 2011.

The economic and political committee identified in 2010 the most crucial macro-
structural growth barriers for Austria, and there were five fields:
1. Implementation of fiscal consolidation taking care of the economic growth
2. Strengthening of the financial sector which is of regional importance
3. Strengthening the domestic demand by reinforcing competitiveness
4. Further increase in labour force participation in the context of an ageing population
5. Enhancing a knowledge-based and innovative economy in the context of global
competition.
 Part 1: Fiscal and budgetary policies as they are reflected within the
national and European strategies

- Objectives established for sizing the budgetary deficit, the public debt, as well as
the budgetary revenues and expenditures, for the period 2010-2015;
Main measures in chronological order
Revenue Expenditure
Tax reform 2009( -0.3%) relief for families
2010 with children and tax cuts for self-employed
Accelerated depreciation( -0.1)
Bank levy( 0.2%) Reduction in administrative costs(-0.2%),
family allowances and pensions(-0.2%)
Rise in the fuel tax and cigarettes tax( 0.2%) Additional spending on education (0.1%)
Advanced taxation of pension funds(0.3%) Cuts in subsidies and administration(-0.2%)
2012 Additional spending on schools(0.1%)
Capital transfers for struggling banks( 0.6%)
Closing loopholes in VAT collection(0.1%) Cuts in pension and unemployment
allowances(-0.3%)
Changes in real estate taxation(0.1%) Administrative reform and salary freeze for
2013 civil servants, public services law( -0.1%)
Financial transaction tax(0.2%) Additional spending on universities( 0.1%)
Health care reform(-0.1%), spending on health
and long-term care(0.2%)
Cuts in pension, increase in the retirement age
and unemployment allowances(-0.2%)
2014 Increase in indirect taxes (0.1%) Cuts in administration and subsidies( -0.1%)
Change of CIT tax base ( 0.1%) Spending on health and long-term care(0.2%)
Health care reform(-0.2%)
2015 Increase in indirect taxes(0.05%) Cuts in pension and unemployment (-0.2%), in
subsidies and administration( -0.2%)
Change of the tax base in corporate taxation( Increase in spending on education, research
0.05%) and family services(0.09%)
Spending on health and long-term care(0.2%)
Health care reform(-0.3%)
 Budgetary deficit objectives and reforms
After the financial crisis, the budgetary deficit increased which led to the
implementation of the excessive deficit procedure in Austria. The Council recommended
the authorities to implement the fiscal measures in 2010 and, starting consolidation in
2011, to end the excessive deficit situation by 2013. The Austrian authorities should
bring the general government deficit below 3% of GDP in a sustainable manner by
taking action in a medium-term framework: to ensure an average annual fiscal effort of
0.75% of GDP over the period 2011-2013 and to specify the measures necessary.
Between 2010 and 2015, Austria reduced the deficit to below the 3% relying on a mix of
discretionary saving and tax measures.

As a result, the Austrian government implemented a package of measures to reduce the

deficit, such as: decrease expenditure growth in a wide range of subjects and ministries(
less effect on education, health, homeland security, active labour market policy), the
spending on administration is reduced, structural reforms within the administration
are initiated; savings made on subsidies and projects.

An example are the actions to slow down the growth on pensions and long-term care in
order to improve the sustainability of the social security and welfare system - the one
year waiting period for the first pension adjustment was reintroduced. The
consolidation package created savings of about euro 1.5bn in 2011, which increased to
euro 3.2bn in 2014. Another example is the first stage of the reform of budgetary
legislation, which consisted in the introduction of a multiannual expenditure framework
for the federal government with fixed ceilings set for four consecutive years, intended
to make budgetary outcomes more predictable in the medium term.

 Public debt objectives and reforms

The Austrian federal Government has as an objective the sustainable budgetary
consolidation and a public debt reduction on medium term. A remarkable consolidation
of public households minimizes the dynamics of the annual debt servicing costs.
In the Federal Budgetary Framework 2012-2015 was started the consolidation,
beginning with the budget for 2011. The public debt ratio would increase until 2013 to
75.5%, and then decrease again. The estimations show that the public debt ratio would
be 74.4% of GDP in 2015.

 Revenue objectives and reforms

The revenue side is also important in order to achieve the goals. The objective is to
continue to close loopholes in the tax system, broaden the tax base and eliminate the
distortionary effects of certain taxes. . A series of measures have been put in action in
order to strengthen the environmental pillar of the Austrian tax system.

One measure would be that the financial sector will contribute in order to bear the costs
of the crises with a new bank levy. This tax would bring revenues of 500 million EUR. It
would depend on the size of the bank. Also, a financial transaction tax will be
implemented starting from 2014. The income from interest within foundations will be
charged with the full rate of capital income tax of 25%. The tax-free period (speculation
period) of one year for the income from owning bonds, was removed. The same period
for sale of real estate and buildings was removed, and the profits from these
transactions will be taxed with 25%. Within the system of corporate group taxation, the
possibility of justifying for losses of foreign branches will be restricted. The deductible
amount is capped at the level of losses determined on the basis of the foreign rules.

Other revenues will be collected from a stricter application of a legislation which fights
against fraud. High income individuals (more than 150.000€/p.a.) will have to pay a
“solidarity fee”. The personal flights are charged more now (8€- short, 20€-medium,
35€-long distance flights). The capital gains taxable in Austria which come from savings
accounts/stocks deposits held in Switzerland will become revenues. The mineral oil tax
has been increased by a special carbon-surcharge equal to 4 cents/litre of gasoline and
5 cents/litre of diesel. The carbon-premiums for newly registered cars was extended by
two more categories. In 2013 existing thresholds for carbon-premium will be lowered
by 10 grams. The exceptions for excise duties on mineral oil for buses, rail and
agricultural vehicles were cancelled. The excise duties on tobacco will increase in
stages up to 25 to 35 cents by the end of 2011.

A reform which would have an immediate impact on the budget: the cap in earnings
relevant for social insurance contributions which will be raised above the usual annual
adjustment and the increase of the contribution rates for farmers and self-employed
which will be fore dated and compulsory unemployment insurance up to the age 63.

 Expenditure objectives and reforms

The main measures on the expenditure side consist in reductions in administrative
costs, cuts in family allowances and pension entitlements. While public expenditure for
health care as percentage of GDP increased, expenditures for general public services
were significantly reduced, due to administrative reforms. However, the consolidation
effort will partly be offset by additional spending on education, R&D and energy-saving
renovation of buildings, through the BVA comprehensive multi-annual consolidation
plan. Regarding the sustainability of public finances, the main cost driver is aging
population which leads to high increase in pension, health care and long term care
expenditures. The eligibility criteria for invalidity pension have tightened. The
retirement age of the long term insurance scheme is being increased 2 years from 2014.

The most important reform is the new budget law reform which provided extended
room and incentives for creating reserves, leading to spending less than the planned
expenditures and the promotion of budget discipline. Stage 1: multi-annual expenditure
framework. Consolidation and medium term orientation are improved for state and
local governments, with the introduction of binding liability ceilings( in 2010, 74%
fixed, 26% variable) that increase transparency. For unused funds, there is the
possibility of non-earmarked reserve fund, which promote efficiency. Stage 2( from
2013): introducing performance budgeting and gender budgeting; full accrual system
for the federal budgeting and accounting system; effective incentives and sanctioning
mechanisms to increase compliance with the budget law;; impact assessment system for
rules and regulations.
Through the Tax Reform, cost savings in state subsidies and public administration of 1.1
bn euros should be achieved. The savings are split between the Federal, Regional and
Local. This amount should be achieved through a cost saving in public administration as
well as in subsidies (e.g. „freezing” of subsidies in certain areas).

- Analysis of the annual dynamics of these objectives, an efficiency analysis regarding

the implementation of the objectives, by underlying the implementation error
 Revenues, Expenditure Deficit and Gross Debt
60 87 88.00
53 52.3
55 50.5 51.2 51.2 51.2
50 G
E
x D 45 48.3 48.7 49.7 49.9 50 84.00 r
47.9
o
p e 40
s
, f 35
79.6 s
i 30 80.00
R c 25 85.54
84.41 D
e i 20 82.39 82.19 82.02 81.32 e
v t 15 76.00
74.2 b
, 10 73.9 73.8 73.8
t
5 4.47
2.59 2.22 1.37 2.74
0 1.04 72.00
2010 2011 2012 2013 2014 2015
Gross Debt Gross Debt Ratio COM Projection
Exp Value Exp COM Projection
Rev Value Rev COM Projection
Deficit
Budgetary deficit: In 2010, the Federal Government aimed at reducing the general
government deficit to 2.7% of GDP by 2013. The planned consolidation was primarily
on the expenditure side without putting aside economic and social policy tasks. This
target was achieved from 2011, with deficit below 2.7% until 2014.
In 2015, it was planned to achieve a Maastricht deficit of 1.4% for the general
government, decreasing from 2.7% of GDP in 2014; a deficit of 1.9% for the central
government; the Länder and municipalities entities to have a balanced budget; the
social insurance a slight surplus of 0.1% of the GDP. Better than expected, the
Maastricht deficit for the general government is lower than planned at 1.04% of GDP; a
deficit of 1.3% of GDP for the federal government; the Länder and the municipalities
achieved a small surplus of 0.07% of GDP; the Social Insurance has a surplus of 0.05%.

Public Debt: The Public Debt’s value was much higher than the expected ones.
The Federal Budgetary Framework (2012-2015) stated that the public debt ratio would
increase until 2013 to 75.5%, and then decrease again. In 2013 the ratio was lower than
in the previous years and lower even from the projections, but instead of dropping, it
increased dramatically. The estimations show that the public debt ratio would be 74.4%
of GDP in 2015, but in reality it hit 87%.

Revenue: The revenues were supposed to increase after the several actions taken in
order to do that. Compared to its projections, there were almost no differences between
them. Between 2010 and 2011, the difference was too subtle, in the first part of the year
the actual values being under the projected ones. Before 2011, the implemented
reforms were efficient and the actual values surpassed the projections. In 2012 the
values were almost the same. Until 2014 there was again a very small difference, but in
the end the actual values exceeded the projections, showing that the efficiency of the
implementation could be observable.

Expenditure: The efficiency of implementation of the reforms in expenditure can be

observed in the graph, where the value of the actual expenditure is lower than the
projected amounts. As an example, we can name the implementation of the 2010
budget, where there was an increase in tax revenues and a decrease in expenditures for
unemployment insurance, due to the policies implemented. Another example is in the
health care sector, in which there was achieved a cost reduction volume of euro 1.725bn
in the years 2010 up to the end of 2013. The budget in 2011 for the health care sector is
euro 868.2bn, less with euro 125.5 bn in 2010.

- Determination of a certain rule for the fiscal and budgetary policies regarding the
size of both budgetary revenues and budgetary expenditures, though elasticity
indicators.

Indicator Unit 2010 2011 2012 2013 2014 2015

Gross Domestic Product Mrd EUR 294.6275 308.6303 317.117 322.5392 330.4176 339.896
Total Government Revenue Mrd EUR 143.1606 149.8381 156.1279 160.8476 165.2586 171.8692
Total Government Expenditure Mrd EUR 156.3381 157.8305 163.1741 165.2569 174.3132 175.4117
Deficit % GDP -4.47 -2.59 -2.22 -1.37 -2.74 -1.04
Gross Debt % GDP 82.39 82.19 82.02 81.32 84.41 85.54
Elasticity Rev to GDP % - 0.981 1.526 1.767 1.122 1.394
Elasticity Exp to GDP % - 0.200 1.231 0.746 2.243 0.219
The Elasticity of Government Expenditure to GDP does not follow a certain trend, in
2011 and 2015 it is around 0.2, in 2013 its 0.7, in 2012 it is 1.2 while in 2014 is 2.243.
From this evolution we can assume that the size of the government revenues does not
have a particular link with the Gross Domestic Product, it is a more indirect relation
corresponding to the overall evolution of the economy and the policies implemented.
What we can observe is that the elasticity is over 1 in 2012 and 2014, where there were
the highest increases in deficit and gross debt, with high increases also present in the
GDP and the level of Expenditure. While in the rest of the years, when the elasticity was
below 1, there were not such large increases in the values of the variables. From this, we
can conclude that the level of the Government Expenditure is inelastic in periods with
lower economic growth, while in periods with higher economic growth it is more
elastic.

The Elasticity of the Government Revenues to GDP also doesn’t have a certain trend.
There is only one year with an elasticity lower than 1 (0.981).In 2011 was recorded the
highest change in GDP, compared to the other years. The change in expenditures was
small. This was the year which recorded a smaller share of revenues in the GDP,
48.55%. However, this is when the biggest change in revenues was. The other years
have elasticity close to 1, recording 1.526 in 2012, 1.767 in 2013, 1.122 in 2014 and
1.394 in 2015.
 Part 2: Fiscal and budgetary objectives in the field of education,
health and social protection

- Objectives established by the fiscal and budgetary policies in the field of education,
health and social protection, in the period 2010-2015;

 Education objectives
The government aspires to lower, by 2020, the rate of drop-outs of pupils to 9.5%, and
to raise the proportion of the 30 to 34 year-old university graduates or graduates from
equivalent post-secondary institutions to 38%. The most important challenges are:
increasing the participation in education, preparing for university studies and
increasing of the mobility in the tertiary sector; increasing the number of graduates
from natural sciences and technology; improving the educational levels and lowering
the drop-out rate; quality of occupational training.

The Austrian education system performs well in terms of quantity as it assures almost a
universal enrolment rate to primary and secondary education. However, the quality of
education provided needs improvement as performance of Austrian pupils in PISA is
rather poor, even with the relatively high expenditure on education. Taking into account
environmental factors such as GDP per head and parental educational attainment, it is
estimated that the educational output in Austria could be increased by 17% while using
the same amount of inputs. This situation is mostly caused by overlapping in financing
and administrative responsibilities between the layers of government, the early
selection of children's education paths and lack of schools' autonomy in deciding over
organisation and staff management.

The School Administration Reform from 2012 proposal involves the elimination of
district school boards as an administrative level, placing multiple school locations under
one administration and assigning greater responsibility to school principals, as well as
additional efficiency increases. In 2015, the Federal Government intends to implement a
reform of the educational system in accordance with the Länder, which includes the
strengthening of the autonomy of schools, more transparency and quality control, clear
responsibilities and performance controlling.

 Health care objectives

Objectives: the drop in the expenditures for health care of an amount of about 1.7 billion
between 2010 and 2013. The 2005 Health Reform Act introduced as measures the
necessity of decreasing the health care costs (new forms of organization of hospitals,
better coordination between hospitals and practitioners in both private and public
sector, reduction of administrative costs). In this area, Austria’s performance is
comparable or even worse than the EU’s average, and the improvement comes with a
higher cost. Significantly efficiency gains could be obtained by reforming the fiscal
relations between the various layers of government. The number of hospital stays in
Austria is among the highest in OECD countries which is a matter that needs to be
addressed. Another objective would be to switch 1% of GDP from the hospital sector to
practising physicians, since their services are cheaper. The preventive health care
should be more developed, Austria being focused on this area.

The objectives aim to overcome the institutional fragmentation of the healthcare

services and to stabilise the expenditures as a percentage of GDP. Austria faces
problems related to the ageing costs, pensions and healthcare. In this respect, the
increasing costs in the health system must be included, but the high quality and the
equal access to the services need to remain the same, in order to ensure the financial
sustainability in the health, pension systems on the long-term. Over time, the ageing
population’s needs for high quality long-term care will increase, so the access has to be
improved for everyone.

Over the years, the measures related to the health care system, included expenditures
on the health care reform, decreases varying from 0.1% of GDP (2013), to 0.3% (2016).
In 2016 there was projected an additional spending on health and long-term care of
about 0.2% of GDP. The central and federal governments limit the increase in the
healthcare expenditures to a benchmark. It is equal to the average nominal GDP growth,
until 2016, and after that, the expenditure growth should not exceed 3.6%.

In addition to the actions referring to the reduction of the health care expenditure, the
authorities have taken as well other measures, for example, the introduction of an
electronic health record. The “Long-term care fund” was lengthened until 2016 with
national funds. 650 million EUR have to be allocated there. Its objective was to improve
the strategic planning and the transparency.

 Social Protection objectives

Objectives: increase participation in the labour market; reduce the effective tax and
social security burden on labour, especially for low and medium-income earners;
reduce the transition period for harmonisation of the statutory retirement age between
men and women to ensure the sustainability of the pension system.

Targets for employment: An employment rate of 77 to 78 % is targeted in the age

group of 20 to 64 years, the focus being on higher employment rate among older
employees, by increasing the effective retirement age. The measures protect the long-
term growth potential of the Austrian national economy with a view to an increasingly
ageing population structure, to increase employment and financial sustainability. The
performance of the Austrian labour market has been good, with a high employment rate
74.9% and the lowest unemployment rate 4.4% in the EU in 2010.
Targets for social protection: The national implementation up to the year 2020 aims
at contributing to the EU target defined by the indicators risk of poverty, material
deprivation, and jobless households for 235,000 persons.

To address these issues, there were implemented two labour market packages which
aim at lowering the unemployment rate, though: training programmes; labour
foundations for the young to reduce unemployment of under‐25 year olds; elderly‐
employee part‐time work; a reform of the educational leave scheme with additional
incentives to upgrade personal qualification. Such a program targets vocational
professions through the creation of 18 new or modernized professions by amending the
law: ‘Vocation with graduation’. The measures made an additional positive employment
effect of 52,400 jobs, about 30,000 jobs from the short‐time working scheme.

The Tax Reform from 2015 is also another measure that mitigates some of the issues
listed above by modifying the system of taxes and levies that place an above-average
burden on labour. It aims to provide a total of 4.9bn euros in relief for workers subject
to income tax. Lowering the minimum income tax rate from 36.5% to 25% will provide
targeted relief, especially in the lower and middle income brackets. The overall volume
amounts to 5.2bn euro, 1.5% of GDP. More than six million wage and income tax payers
will benefit from these measures. An additional 100 million euros will be disbursed for
families by a doubling of the child allowance from 220 euros to 440 euros, which allows
them to take up work or increase working hours, thus reconcile work and family.

- Descriptive statistics regarding the level of the budgetary expenditures for

education, health care and social protection
Social Social
Education Education Healthcare Healthcare Protection Protection
Indicator 2006-2015 2010-2015 2006-2015 2010-2015 2006-2015 2010-2015
Mean 4.96 5.016667 7.78 7.916667 20.89 21.4
Standard Error 0.04 0.016667 0.08 0.065405 0.280654 0.177012
Median 5 5 7.8 7.85 21.15 21.5
Mode 5 5 7.8 7.8 21.8 21.8
Standard Deviation 0.126491 0.040825 0.252982 0.160208 0.887506 0.43359
Sample Variance 0.016 0.001667 0.064 0.025667 0.787667 0.188
Minimum 4.7 5 7.4 7.8 19.5 20.8
Maximum 5.1 5.1 8.2 8.2 21.8 21.8
The level of Government Expenditure with Education for the period 2006-2015 had the
following characteristics: mean 4.96%, median 5%, standard deviation 0.12, minimum
4.7%, maximum 5.1%. The Government Expenditure with Education for the period
2010-2015 had the following characteristics: mean 5.01%, median 5%, standard
deviation 0.04, minimum 5%, maximum 5.1%. From these, we can see that the
expenditure with education almost did not change in the period 2010-2015, while in the
period 2006-2015 there was a slight increase in its value. This is due to the fact that the
policies regarding education were given more attention before the financial crisis.

Expenditures for Education, Health and Social Protection

60 52.8 50.8 51.1 50.8 52.6 51.7
% 50
40
G 30 21.8 20.8 21 21.3 21.7 21.8
D 20
8.25.1 7.8 5 7.8 5 7.8 5 7.9 5 8 5
P 10
0
2010 2011 2012 2013 2014 2015

Health Education Social Protection Total Expenditure

The Government Expenditure with Social Protection for the period 2006-2015 had the
following characteristics: mean 20.89%, median 21.15%, standard deviation 0.88,
minimum 19.5%, maximum 21.8%. The Government Expenditure with Social Protection
for the period 2010-2015 had the following characteristics: mean 21.4%, median
21.5%, standard deviation 0.43, minimum 20.8%, maximum 21.8%. From these values
we can observe that expenditure for the period 2010-2015 had a lower fluctuation
while at the same time they were higher compared to those for the period 2006-2015.
We can assumes that it has these features due to the aging population, the impact of the
financial crisis on unemployment and due to the tax reform, all of which had led to an
increase in the expenditure with social protection.

The expenditures of the Government related to the Health sector between 2006 and
2015 had the characteristics: mean-7.78%, median 7.8%, standard deviation 0.25,
minimum 7.4% and maximum 8.2%. For the period 2010-2015, we can observe the
following: mean 7.91%, median 7.85%, standard deviation 0.16, minimum 7.8% and
maximum 8.2%. The Health expenditures had a decreasing trend between 2010 and
2015. Even so, most of the indicators computed for this period were higher than those
computed for 2006-2015. The mean increased from 7.78 to 7.91. The median increased
only slightly, to 7.85. The standard deviation was lower, meaning there were smaller
variations between the values. The minimum values increased, but the maximum
remained the same. We can conclude that these numbers reflect the issue of the health
care system, the aging population. Also, there were some policies regarding the
expenditures, which consisted in lowering the expenditures in this sector, and this can
be observed in the first graph, where the expenditures decreased slightly in 2015.

- Determination of the efficiency of the budgetary expenditures for education, health

care and social protection also by underlying the correlation between the level of the
budgetary expenditures mentioned with the HDI (human development index),
GDP/capita and real GDP growth
Indicator 2010 2011 2012 2013 2014 2015
HDI 0.879002 0.881272 0.8839212 0.884234 0.88502 -
GDP per Capita 35135.74 36733.21 37514.47 37946.8 38527.5 39200.57
Real GDP Growth Rate 1.93 2.81 0.76 0.32 0.35 0.88
Healthcare 8.2 7.8 7.8 7.8 7.9 8
Education 5.1 5 5 5 5 5
Social Protection 21.8 20.8 21 21.3 21.7 21.8

GDP per Real GDP Social

Correlation HDI Capita Growth Rate Healthcare Education Protection
HDI 1
GDP per Capita 0.984506 1
Real GDP
Growth Rate -0.80844 -0.72509 1
Healthcare -0.71752 -0.74623 0.25038 1
Education -0.8254 -0.86688 0.354783 0.968246 1
Social
Protection -0.13182 -0.1582 -0.34258 0.767691 0.620505 1
Education: There is a strong positive correlation between the expenditure on education
and GDP per capita, which means that as GDP per capita increase so does the
expenditure on education. There is a weak positive correlation with the real GDP
growth rate, which means that an increase in the growth rate has a small influence on
expenditure on education. These explain that when the income of a country increases,
the importance of education becomes greater. There is a strong negative correlation
with the HDI, which means that as the index becomes higher the expenditure on
education decreases.

Healthcare: The Health care system’s expenditures have a strong negative correlation
with HDI. When the value of one of them increases, the other decreases. In this case, it is
perfectly normal. This index’s dimensions are long and healthy life, knowledge, decent
standard of living. When people are better in these cases, their expenditures with
health (medications and treatments, hospitalization etc.) will be lower and this results
in a strong negative correlation between HDI and health expenditures. Also there is a
strong negative correlation between GDP per capita and health expenditures. As an
explanation we can conclude that when people have a better standard of living (higher
GDP per capita), their expenditures on health decrease. On the other hand, the real GDP
growth rate is positively correlated to the expenditures in this sector. When there is
growth, the expenditures increase slightly.

Social Protection: There is a weak negative correlation both with the HDI and the GDP
per capita, which means that if one of the indicators increases, the expenditure on social
protection will be decreased only slightly. There is a medium negative correlation with
the real GDP growth rate, which means that an increase in this indicator will have a
larger impact on the expenditure on social protection. These are due to the fact that
when the GDP increases there are more people employed, so the social protection
expenses decrease.
 Part 3: The macroeconomic stability pentagon

- The graphs of the macroeconomic stability pentagon for the period 2010-2015;

2010 2011
rg 1
6.00 6.00
4.00 1.93 2.81
4.00
2.00 2.00
0.00
cd3.15 -2.00 4.80
u 5 0.00 2
4.60
1.88 -2.00
-4.00
-6.00 -4.00
-4.47 -2.59

2.31 3.17
d I 4 3

2012 2013
1 1
6.00 6.00
4.00 4.00
2.00 0.76 2.00 0.32
5 0.00 4.90
2 5 5.40
2
1.70 -2.00 1.60 0.00
-4.00 -2.00
-1.37
-2.22
1.81
2.78
4 3 4 3

2014 2015
1 1
6.00 6.00
4.00 4.00
2.00 0.35
2.00 0.88
0.00 5.60 5.70
5 2.55 2 5 2
-2.00 2.47 0.00
-4.00 -2.00
-2.74 -1.04
1.00
1.01
4 3 4 3
- Comparative analysis regarding the changes that occurred annually and also
compared with the years in which the pentagon registered the smallest/largest
surface;
When analysing the pentagon,
2010 - 2015 - Normal variables we should first have in mind
rg the size of the area formed. The
6.00
4.00 larger it is, the more stable the
2.00 2010 economy is. From this point of
0.00
cd -2.00 u
2011 view, it is observable that its
-4.00 2012 size shrinks over the period we
-6.00
2013 analysed. The highest stability
2014
is recorded in 2010, and the
lowest in 2015.
2015
d I
The real GDP growth rate
decreased continuously, but
with the exception of 2011, when there was recorded the highest value, of 2.81% of
GDP, and 2015, when it increased slightly, but the trend remained the same. The worst
year regarding the real GDP growth would be 2012, when the rate dropped dramatically
from 2.81% to 0.76%. The lowest value however is reached next year (2013), when the
growth was of only 0.32% of GDP. After this episode, the economy started to recover,
but with small changes. The unemployment rate continued to increase every year. Of
course, this is not a good thing for the economy as a whole it should have been as low as
possible. The lowest value is recorded at the beginning of the period, in 2010, and the
highest in 2015. It increased from 4.8% to 5.7%. The inflation influenced the stability
with its decreasing trend. From 2.31% (the highest) it went to 1% (the lowest) in the
last year of the analysis. It affects in a good way the pentagon, since it decreased
continuously. The deficit decreased over the five years from -4.47% of GDP, to -1.04%.
The current account deficit’s decreasing trend affects in a positive way the pentagon.
The balance should be positive however, but a decreasing deficit is a sign of better
stability.

2010 was though a good year from some perspectives. The growth wasn’t the best, but
it was still a high value, the second ranked, compared to the next years (1.93%). The
unemployment was then at a low value, also ranked the second. Inflation was higher
than in the last three years, when its trend was to decrease. The main destabiliser was
de government deficit, which was at its highest percentage then, -4.47% of GDP. The
current account in 2010 was also at its highest, but this helped the stability.

In 2011 the real GDP growth was the best level recorded in our analysis. 2.81% of the
GDP was then due to the growth. The unemployment area booked a lower rate than the
previous year, a rate still lower than the majority met in this analysis. (4.6%). On the
other hand, the inflation increased and affected the stability. In increased meaningfully
from 2.31% to 3.17%. The deficit started its decreasing trend, reaching a percentage of -
2.59%, after its highest value recorded one year before. The same movement is
followed by the current account, but having a different result. It decreased to 1.88% of
GDP, affecting negatively the pentagon and its stability.

In 2012 the real GDP growth dropped drastically, affecting the stability of Austria’s
economy. It dropped from its highest value, reaching then 0.76%. The unemployment
started to increase this year, not significantly, but it opened the trend of the increasing
percentage of unemployment. Inflation decreased, as well opening the trend for the next
three years, of lower inflation. However, it was higher than in the first year of the
analysis. The deficit continued its tendency of decreasing, reaching -2.22% of GDP. The
current account as well affected negatively the pentagon, since its balance decreased
this year also.

By far, 2013 might have been the worst year from the economic growth point of view.
The real GDP growth reached its minimum, only 0.32%. The unemployment continued
to increase, but it still hasn’t reached its maximum. However, its value was above 5%.
Inflation wasn’t so bad after all. It continued its decrease, dropping by more than 1%.
Deficit’s fell that year, to -1.37%, but next year increased. The balance of the current
account reached its minimum, but not much lower than the last year. (1.6% of GDP).

2014 was the year in which the pentagon started to recover. The growth didn’t go too
far, increasing only very slightly, by 0.03% from the previous year. The unemployment
destabilised forward the pentagon. It continues to approach higher and higher values.
The inflation continues its trend, reaching almost its lowest value. The deficit on the
other hand widens by increasing to -2.74% of GDP. The current account recovers
previous losses, by going up to 2.55%.

The last year of the analysis, 2015, the growth still struggles to increase, at this point
being of 0.88%. The unemployment continues to increase, by this year reaching the
highest amount, 5.7%. Conversely, the inflation continues to fall. It reached its
minimum, as well as the deficit. The current account decreases only slightly, by 0.03%.

- The graphs of the macroeconomic stability pentagon for the period 2010- 2015
(considering the minimum and the maximum values of the 5 indicators)
2010 2011 2012 2013 2014 2015
Macroeconomic stability 21.927 34.455 32.848 35.490 28.914 32.733

The five indicators used in this analysis are: real GDP growth rate( rg), the
unemployment rate( u), the inflation rate( u), the deficit as percentage of GDP( d) and
the governmental debt as a percentage of GDP( gd). All have an equal contribution in
stabilizing the macroeconomic conditions, each representing a certain area of influence.
The real GDP growth rate expresses the potential of the economy to maintain
sustainable growth, the unemployment rate the degree of utilization of the human
potential, the inflation expresses the purchasing power of the consumers, the budget
deficit is an indicator of public resource allocation and, lastly, the governmental debt is
an indicator for the financing attracted from abroad and its allocation.
The analysis of the
2010-2015 Transformed Variables
macroeconomic stability
rg pentagon of Austria in
10.000
8.000 2010 this section is done
6.000
2011
through a different
4.000
gd
2.000
u methodology then the
2012
0.000 one presented before,
2013
more specifically though
2014
the normalization of the
d i
2015 values of the indicators
and placement on a scale
from 1 to 10. Another
particularity is the reversed scale for all indicators, except for the real GDP growth rate.
Also, the minimum and maximum values are taken from the period 2005-2015, not the
analysed one 2010-2015.

By analysing the pentagon that includes all the six years, we can observe that the
highest impact in decreasing the size is due to the debt indicator, as a result of the
increase in the debt taken. The unemployment rate represents an element which
decreases the macroeconomic stability, having higher and higher values, even if it’s the
best in the entire Europe. An indicator that improved is the deficit indicator which had
improved greatly, the excessive deficit procedure implemented having the desired
results. The inflation rate is also kept under control by the Austrian government, which
increased the macroeconomic stability along with the real GDP growth rate. Also the
Macroeconomic stability indicator, which is the sum of the individual indicators, with
values from 0 to 50, has been improving compared with 2010, although the one from
2014 was lower than the rest, as a result of the increase in debt, unemployment and
deficit.
Analysing the pentagons for the six years, we can see that its size has continued
decreasing as a result of the financial crisis, in 2013 having the smallest surface and in
2010 having the largest surface. Another fact is that it never had the appearance of a
pentagon, more of a triangle, which indicates that the Austrian government focused its
policies only on three indicators at a time and did not apply more comprehensive
methods. Moreover, before the crisis, the focus was on the real GDP growth rate and
unemployment, mostly, and afterwards, it shifted to the management of inflation and
deficit, while still keeping a steady real GDP growth. Also, the effect of the excessive
deficit procedure is quite clear, the deficit becoming smaller and smaller and increasing
the surface of the pentagon.
 2010 2011
rg rg
10.0007.652 10.000
8.000 8.000 8.880
6.000 6.000
gd 4.000 u gd 4.000
2.000 5.625 2.000 6.875u
1.521 1.616
0.000 0.000
1.749
3.559
5.019
7.890
d i d i

2012 2013
rg rg
10.000 10.000
8.0006.016 8.0005.407
6.000 6.000
gd 4.000 u gd 4.000 u
2.000 5.000 2.000
1.701 2.036 1.875
0.000 0.000
0.747
2.713 3.232
6.920
d i d i

2014 2015
rg rg
10.000 10.000
8.000 5.452 8.000 6.181
6.000 6.000
gd 4.000 u 4.000
2.000 gd u
0.545 0.625 2.000
0.000 0.0000.000
0.000

3.906
d i d i
9.962 10.000 10.000

By comparing the graphs from 2010, 2013 and 2015, we can conclude that: the biggest
impact of the financial crisis was the increase in the unemployment rate and the deficit,
while also impacting the real GDP growth rate. As a way to increase the surface of the
pentagon to its original shape before the crisis, the Austrian government has pursued
policies to combat the high inflation and high deficit and also to increase the real GDP
growth rate, which negatively impacted the unemployment rate and the debt which got
higher. From these, we can say that the main indicators targeted by the government are
the inflation rate, the deficit and the real GDP growth rate.
 Part 4: Evaluation of the excessive tax burden by using the Laffer
curve

- Analysis regarding the level of fiscal revenues expressed in the prices of a base year
as well as the level of the general tax rate for the period 1995- 2017

Evolution of Tax Revenues and the Tax Burden

170 46

160 45

150 44

140 43

130 42

120 41

110 40

100 39
2007
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006

2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Tax Revenues Real Mrd EUR
Real Total tax burden including imputed social security contributions Mrd EUR
Total tax burden including imputed social security contributions % GDP

The Real Total Tax Revenues have an increasing trend up to the present. There were
small fluctuations over the years, but the trend remains the same. The highest value is
projected for 2017. In 1995 the revenues were of about 114 bn. EUR., the smallest
amount, and in 2017 are forecasted 157.67 billion revenues from taxes. Over the time,
the share of tax revenues in the GDP increased from almost 43% to more than 45%.
Both the revenues and the tax burden followed the same pattern.

The Real Tax Burden follows the tax revenues’ trend, but has larger fluctuations,
especially after 2008, when it decreased significantly. Another moment worth
mentioning would be 2002, when they decreased considerable, but recovered
afterwards. The share in GDP of the tax burden is increasing from less than 43% of GDP
to more than 45% in 2017. Otherwise, their movements followed the trend.

The total tax burden however seems different from the real total tax burden. At the
beginning of the analysed period, its value was around 140 billion EUR, increasing
significantly until 1998 to more than 160 billion EUR. In the next two years followed a
decrease, reaching less than 150 billion EUR in 2000. The next important movement
was reaching the maximum point, of more than 160 billion EUR in 2001. The share in
GDP then was more than 45%. Until 2006, the value decreased continuously up to
almost 130 billion EUR and a share of less than 42%. After this year, the total tax burden
continued to go up, but with a notably increase in 2008, the year with the beginning of
the financial crisis, when it jumped from 110 to more than 130 billion EUR. From 2015
it seems that the trend might be decreasing.

- Descriptive statistics: mean, median, standard deviation, minimum, maximum

regarding the level of the fiscal revenues and of the tax rate for 2010-2015
Total tax burden including imputed social
Year Tax Revenues Real Mrd EUR security contributions % GDP
2010 143.1606 41.96479
2011 145.0514 42.07186
2012 147.5689 42.66905
2013 149.071 43.50476
2014 150.6459 43.74461
2015 155.2567 44.32744

Tax Revenues Tax burden

Mean 148.4591 Mean 43.04708378
Standard Error 1.749699 Standard Error 0.391606749
Median 148.3199 Median 43.08690247
Standard Deviation 4.28587 Standard Deviation 0.959236715
Sample Variance 18.36868 Sample Variance 0.920135076
Range 12.09613 Range 2.362655292
Minimum 143.1606 Minimum 41.96478604
Maximum 155.2567 Maximum 44.32744133
Sum 890.7546 Sum 258.2825027

The tax revenues increased yearly from 2010 to 2015, from 143.16 billion EUR to
155.25 billion EUR. The mean value of the tax revenues is 148.45 billion EUR, between
2012 and 2013 (between 147.56 and 149.07). The median is a value find closely to the
mean, a lower one, 148.31 Billion EUR. The standard deviation of the tax revenues is
4.28 billion EUR. The minimum value is represented by the value from 2010, and the
maximum that one from 2015, therefore the trend is increasing continuously.

The tax burden follows the same movement. The mean is 43.04% of GDP. The median is
a little bit higher than the mean, 43.08% and it’s located between 2012 and 2013
(42.66% and 43.5%). The standard deviation is in this case of 0.9%. The minimum and
the maximum values coincide to the values from 2010 and 2015.
- The relation between the volume of fiscal revenues and the level of the tax rate (base
2010)

For the analysis of the relation between the volume of the fiscal revenues and the level
of the tax rate, we used a first degree regression and a second degree regression. The
analysis has as purpose the determination of the efficient tax rate which provides the
highest level of fiscal revenues, without increasing the level of the tax burden supported
by the population. This information can be used as an important indicator in the choice
of tax policy of a country, which determines the level of budgetary expenditure and tax
revenues, and to see whether it has a recessionary or expansionary effect on the
economy.

The variables chosen are the level of the fiscal revenues in Mrd Euros and the level of
the tax burden as percentage of the GDP as a proxy for the level of the tax rate
registered in Austria for the period 1995-2016, with the Harmonized Consumer Price
Index with base year 2010.

The first regression has the following equation as result: Vi=355.9271-5.0394*ri , in

which Vi represents the level of the fiscal revenues and ri the tax burden as percentage
of GDP, the values having as base year 2010. The regression is valid from a statistical
point of view, the p-values being below 5%, the R-squared equal to 19.96%, the residual
are normally distributed. Though the equation of the regression, we can say that the
relation between the level of fiscal revenues and the level of the tax rate is a negative
one, when the tax rate increases the level of the fiscal revenues drops. This supports the
theory behind the Laffer curve, which states that after the efficient tax rate is passed, an
increase in the tax rate will decrease the level of the fiscal revenues.

The second order regression was only computed for the period 2000-2017 and has as
equation: Vi=-3995.317+193.189*ri-2.553*ri*ri. This regression is no longer valid,
having high p-values and a F-significance higher than 5%. Although it is not statistically
significant, it was used for the determination of the efficient level of the tax burden, the
value being 42.8588%, which brings in tax revenues 144.6231 Mrd EUR. The value of
the fiscal revenues is low compared with the ones from 2010 onwards probably due to
the lower values form the period 2000-2010.

The representation of the fiscal revenues registered in the period 2000-2017 with the
level of tax burden is not perfectly in accordance with the regression equation, as we
can see the higher values of fiscal revenues were achieved with higher tax rates. This
leads to the conclusion that the efficient tax rate is positively influenced by the
improvement of the economic conditions.

Level of Fiscal Revenues 2000-2017

150
145
140
135
130
125
120
115
110
105
100
41.5 42 42.5 43 43.5 44 44.5 45 45.5
Tax Burden % GDP

A representation of the Laffer curve is below, which shows that for values higher that
the efficient tax level, the level of the fiscal revenues collected will diminish and will
impose a high tax burden, while keeping it below the efficient level with bring the same
amount of revenues but will not increase the burden supported by the population. On
the chart are also mapped the values of the level of the fiscal revenues and the tax
burden as percentage of GDP registered in Austria in the period 2010-2015.

Laffer Curve
160
144.6231
140

120
Tax Revenue in Mrd Eur

100

80

60

40
42.8588
20

0
34 36 38 40 42 44 46 48 50
Tax Burden as % of GDP

As an additional analysis, we ran regressions for each of the main components of fiscal
revenue to see which one was the most influenced by the level of the tax burden, but
none of the regressions was statistically significant. The best regression was for the
taxes linked to imports and production (indirect taxes), which have the strongest
impact on the level of the tax burden.

As a conclusion, from a budgetary and fiscal policy perspective, Austria imposed a high
tax burden on its population of 42%. The recent tax reform is the way in which the
government tries to diminish the tax burden, by making available numerous tax reliefs
for most of the population, targeting both individuals and companies.
 Part 5: Quantitative analysis regarding the effects of the fiscal and
budgetary mix policies

- The general economic equilibrium equation for the period 2010-2015

Indicator Unit 2010 2011 2012 2013 2014 2015
S=Gross saving: private Mrd
sector :- ESA 2010 EUR 76.23 76.12 75.39 75.12 77.68 77.68
I=Gross fixed capital
formation at current Mrd
prices: private sector EUR 54.15 60.03 62.57 64.77 65.29 66.91
Mrd
S-I EUR 22.08 16.09 12.82 10.34 12.38 10.77
T=Total revenue:
general government :- Mrd
ESA 2010 EUR 143.16 149.84 156.13 160.85 165.26 171.87
G=Total expenditure:
general government :- Mrd
ESA 2010 EUR 157.83 163.17 165.26 174.31 175.41 178.33
Mrd
T-G EUR -14.67 -13.34 -9.13 -13.47 -10.15 -6.46
X=Exports of goods and
services at current
prices (National Mrd
accounts) EUR 150.27 165.65 170.60 171.57 175.17 180.35
M-Imports of goods and
services at current
prices (National Mrd
accounts) EUR 140.48 157.87 162.37 163.24 164.27 166.73
Mrd
X-M EUR 9.79 7.78 8.22 8.33 10.90 13.62
Mrd
(S-I)+(T-G)-(X-M) EUR -2.38 -5.02 -4.53 -11.45 -8.67 -9.31
Mrd
(S-I)-(X-M) EUR 12.29 8.31 4.60 2.02 1.48 -2.85
Mrd
(G-T)* EUR 12.29 8.31 4.60 2.02 1.48 -2.85
Mrd
(G-T) EUR 14.67 13.34 9.13 13.47 10.15 6.46
(G-T)*-(G-T) Deficit Deficit Deficit Deficit Deficit Deficit

The macroeconomic equilibrium is not respected in any of the years, (S-I)-(X-M)=(G-T)*

always being lower than actual (G-T), which lead to a deficit being registered in all the
years, the difference between the two becoming larger and larger.
Savings were higher than the investments in the private sector in all the years, although
their difference has been decreasing yearly. The saving behaviour of the population is
an effect of the economic crisis, which begins to diminish each year as the economy
becomes stronger. Savings decreased slightly from 2010 until 2014 when the value
increased from 75.12 billion EUR to 77.68 billion EUR. The value remained the same in
2015. On the other hand, the investments continued to increase yearly, probably due to
the low interest rates and the policies implemented by the government, as well as
increase public investment in infrastructure, which is a good sign in the economy.

The government ran on deficit for all the analysed period. The deficit was being to
improve but in 2013 it grew again due to the increase in expenditures in social
protection and healthcare. However, it continued the decreasing afterwards, reaching
its lowest value in 2015 of -6.46Mrd Eur. Both the revenues and the expenditures had
an increasing trend in all the years.

The net exports of the country were positive all the time, which is the sign of a good
economy in term of international trade. The exports of goods and services increased
every year, but with higher fluctuations than the imports, therefore the result was a
positive value. The trend is upward.

- The necessary annual increase within the budgetary expenditures, by using the
general economic equilibrium equation, so as to obtain the same economic growth
as that registered before the economic crisis. The comparison is made with the
current annual level of the budgetary expenditures

Gross T=Total revenue: G=Total

domestic general expenditure:
product at government :- ESA general government
Indicator current prices g 2010 (URTG) :- ESA 2010 (UUTG)
Unit Mrd EUR % Mrd EUR Mrd EUR
2007 282.35 - 135.91 146.50
2008 291.93 3.39 142.03 155.95
2009 286.19 -1.97 140.52 156.34
2010 294.63 2.95 143.16 157.83
2011 308.63 4.75 149.84 163.17
2012 317.12 2.75 156.13 165.26
2013 322.54 1.71 160.85 174.31
2014 330.42 2.44 165.26 175.41
2015 339.90 2.87 171.87 178.33
2016 351.48 3.41 172.97 183.51
2017 363.09 3.30 178.64 183.51
 Scenario: g=3.39%
c 0.66
ΔY 11.91525
Y* 363.3974
ΔG 3.991881
G* 187.50
%G 2.175269
ΔT -6.00304
T* 166.97
%T -3.4705
c=MPC=ΔC/ΔI 0.664977
s=MPS=ΔS/ΔI 0.335023
Government spending
multiplier 2.98487
Tax multiplier -1.98487

c=MPC=ΔC/ΔI 0.664977
s=MPS=ΔS/ΔI 0.335023
Government spending
multiplier 2.98487
Tax multiplier -1.98487

In order to achieve an increase of 3.39% of GDP, the value that was registered before
the financial crisis, for the year 2017, the government does not need to make large
adjustments, since the growth rate from 2016 was 3.41% and the forecasted growth
rate from 2017 is 3.3%. As a result the required increase in Government spending is of
3.99 Mrd Euro in order to reach a Potential Government Expenditure of 187.5Mrd Euro,
the percentage increase being of 2%. The Potential Government Expenditure value is
not very different from the one forecasted which is 183.51 Mrd Eur. This increase in
Government Expenditure could be achieved quite easy trough a project in Education, to
implement an educational project in schools about Vocational professions, or
Healthcare, to raise awareness about a certain illness and provide free testing.

- The necessary annual decrease within the tax revenues, by using the general
economic equilibrium equation, so as to obtain the same economic growth as that
registered before the economic crisis. The comparison is made with the current
annual level of the tax revenues

In order to achieve the same increase of 3.3% though taxation, the government must
decrease taxes by 6 Mrd Eur, leading to a Potential Tax Revenue of 166.97 Mrd Eur and
a change in taxation of -3.47%. From this results, we notice that a higher change in taxes
is needed compared to the change in government spending in order to reach the same
result. The value of Tax Revenues should decrease in 2017 to 166.97 Mrd Eur compared
to 172.97 Mrd Eur in 2016. The modification can be made by offering a temporary tax
relief of a certain category of the population, possibly in a working sector that needs to
be encouraged to grow by offering tax incentives. Moreover, the government though the
tax reform implements a tax relief for most of the population, which will have the
desired impact on the GDP.
 Conclusion

The Austrian economy entered the crisis on solid fundamentals, without having to
suffer the major imbalances or distortions others felt.. Unsustainable housing or credit
booms were avoided. Price stability was consistently maintained during the hard times.
Indebtedness of households and corporations was not high as a result of the significant
reduction after 2002, while private savings were consistently high. One contributing
factor would be the series of pension system reforms introduced in the 2000s which led
to precautionary saving. The recession of 2009 was not as deep, since Austria’s
economy shrank by 3.9% of the GDP, compared to the EU average of -4.2%. Austria’s
return to growth was faster and stronger than in the rest of the EU, marking 2% of GDP
in 2010 against the EU average of 1.8%.

A low annual budget deficit and modest state debt before the crisis allowed the Austrian
government to counteract the recession with a bold fiscal stimulus. Infrastructure
building put firms and people to work. Income tax cuts helped the consumer spending.
Private consumption turned out to be a stabilising factor, supported by the elasticity of
the Austrian labour market Not least, a €100 billion loan package to Austrian banks
helped increase their capital and enabled them to resume lending. Despite these costly
interventions, the state’s annual budget deficit remained lower than the EU average. At
its highest it was 4.6% of GDP in 2010, while the EU’s hit 6.4% that year. Therefore,
Austria’s total public debt of 73.8% of GDP in 2011 remains significantly lower than the
86.5% average for the euro area, the EU average of 82.3%.

The first two parts regarding the fiscal and budgetary policies reflect the changing
budgetary and fiscal environment present in Austria, in which many reforms are being
implemented to increase the efficiency of budgetary spending, to maximize the
revenues collected and to ensure the proper education, healthcare and social protection,
in order to reach the long run objectives.

The Macroeconomic Stability Pentagon provides insight in which of the five indicators,
Austria put the most emphasis in the analysed period. This analysis sustains what was
observed in the first two parts of the project, the most important indicators were the
deficit and inflation.

The Laffer curve analysis emphasis the high tax burden supported by the population of
Austria and also offers the explanation behind the tax reform analysed in the first part
that offers tax relief for a large part of the population, but also increased taxation in
other areas which are considered to be of a particular interest.

The Macroeconomic equilibrium part shows that the policies implemented by the
government after the financial crisis had the desired effect, since the economic growth
has reached almost the same level as before the crisis.
 References

Ameco Database
Eurostat Database
Worldbank Database
OECD database

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index.html

http://ec.europa.eu/europe2020/europe-2020-in-your-country/osterreich/country-
specific-recommendations/index_en.htm

http://ec.europa.eu/economy_finance/economic_governance/sgp/convergence/index_
en.htm

http://ec.europa.eu/economy_finance/economic_governance/sgp/budgetary_plans/in
dex_en.htm

http://ec.europa.eu/economy_finance/economic_governance/sgp/deficit/countries/au
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http://ec.europa.eu/europe2020/europe-2020-in-your-country/osterreich/country-
specific-recommendations/index_en.htm

http://ec.europa.eu/economy_finance/publications/eeip/ip037_en.htm

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/themes

http://ec.europa.eu/economy_finance/ameco/user/serie/SelectSerie.cfm