Budget Proposal for 2005: Tax Reform Causes High Public Deficit

The 2004-05 tax reform and the after-effects of the stimulus packages, which were introduced as a counter-measure to the weak economic growth during the past three years, will increase the overall budget deficit to 1.9 percent of GDP in 2005. Transfer expenditures will gain in weight again. The tax reform will alleviate the tax burden on the mass income, decrease federal tax revenues, and increase the importance of indirect taxes. Due to the divestment strategy pursued in the last years, the share of off-budget institutions in overall public investment, employment, and debt is rising over time. The 2005 budget proposal for the first time provides for first steps of a gender-sensitive analysis of the federal budget.