National Bank Analysis: Families with Children and Banks Most Affected by Budget Measures

An analysis by the Austrian National Bank (OeNB) reveals that the government's budget consolidation measures, approved this week, will disproportionately burden individuals with low incomes and families with children. The measures, implemented since 2025, are considered relatively growth-friendly in historical comparison but are notably expenditure-heavy.

The OeNB's "Policy Brief" examined the distributional effects of changes in social security and family benefits. These include pension adjustments, alterations to unemployment insurance contributions, reforms to the family bonus, non-indexing of family benefits, an activity bonus for pensioners, and an increase in the maximum contribution base. The analysis found that households in lower income brackets are most affected, particularly by the rise in unemployment insurance contributions, which often impacts part-time second earners. Single parents and pensioners are also significantly impacted by social benefit cuts, though pensioners receive some relief from the activity bonus.

Businesses are also affected differently depending on their sector. The banking sector bears the heaviest burden, with a 1.3% increase in tax liability relative to gross value added due to the banking levy. Other sectors experience a lighter impact, with tax relief ranging from 0.2% to 0.4%. Measures like reduced ancillary wage costs benefit companies with large payrolls in industries such as manufacturing, trade, construction, education, and healthcare. Conversely, a progressive corporate tax increase primarily affects the energy, trade, finance, and real estate sectors.