According to the data of the European Statistics Office (Eurostat), annual inflation, which was 7.4 percent in April in the Euro Zone, which consists of a total of 19 European Union (EU) member countries, rose to 20.1 percent in Estonia, breaking a record.
Inflation, which was determined as 10.7 percent in Greece and 9.9 percent in Belgium, increased to 7.9 percent in Germany last month, reaching its highest level since the winter of 1973-1974 when the oil crisis took place.
While the coronavirus epidemic and the Russia-Ukraine war turned all economic indicators upside down, inflation in Austria, another strong economy in Europe, which is said to be not easily affected by crises, reached its highest level since 1981 with a rate of 8.1 percent. .
With this figure, inflation increased by 500 percent in a year, while energy prices increased by 33.5 percent on an annual basis. Analysts state that the war initiated by Russia in Ukraine continues to put pressure on both energy and food prices, causing record inflation, and that the problems in the supply chain also negatively affect Austria.
It is stated that it is difficult to predict when inflation will stop, and it is expected that the increase will continue at the same pace in the coming months, considering that the war will continue.
6 BILLION EURO SUPPORT PACKAGE FROM AUSTRIA
To what extent the support package decided by the Austrian government, which aims to reduce the burden of citizens due to the high cost of living and approved by the Federal Parliament in Vienna, will curb inflation is a question that is eagerly awaited.
While it was announced that the aid package is approximately 6 billion Euros, within the scope of the measures, 250 Euros will be paid once only to households with an annual income of up to 55 thousand Euros.
While citizens who do not pay taxes can also benefit from this assistance, 300 Euros will be paid for groups that are particularly affected by the increasing inflation, such as the unemployed and the minimum pensioners. Within the scope of family assistance, a one-time payment of 180 Euros per child will be made.
Apart from the aid to families, unemployment and care allowance, minimum living allowance and sickness payments will be adjusted at the rate of inflation; Likewise, the tax exemption limit for low pensions will be rearranged in proportion to inflation.
Support payments will be made to businesses with high energy needs, and corporate tax will be reduced from 25 percent to 23 percent. Austrian Chancellor Karl Nehammer announced that the aim of the measures, which he described as “the largest economic support package in the history of Austria after World War II”, is to improve the earnings of employees at a level that they can sustain their lives, and that a policy that will accelerate economic growth will be followed in parallel.
FUEL TAX REDUCTION ANGRY IN GERMANY
On the other hand, the developments in the three-month tax reduction, which was introduced by the German government to alleviate the burden of constantly rising fuel prices, caused great reactions in the public.
Prime Minister Olaf Scholz and his cabinet started to apply a state-supported reduction in fuel tax within the scope of the new measure package, which was put into practice under the name of “Life Facilitation Law” on 1 June.
According to the regulation, it was planned to decrease the price of gasoline by 35 cents and diesel by approximately 17 cents per liter, and it was aimed to pay the tax difference to companies by the state. However, the fact that the tax cut, which was estimated to cost the state approximately 3 billion Euros, was not reflected on the citizens became the subject of great debate.
After the companies lowered the prices per liter relatively in the first days, the prices have increased to their old rates in the last days. Gasoline is sold at the prices in May, that is, 2 Euros, while diesel is sold for an average of 2.05. The big oil monopolies did not reflect the tax cut in fuel to the consumers, thus gaining a surplus due to the crisis due to the tax aid they received.
Federal Minister of Economy Robert Habeck announced that anti-monopoly regulation should be introduced in the competition law to punish large oil companies; however, Prime Minister Olaf Scholz stated that there was nothing he could do, arguing that the shortage of fuel in refineries due to the war had increased prices, and stated that companies could not be prevented from filling their coffers even more.
85 percent of respondents to a survey on the subject stated that the tax cut on fuel did not bring any benefit to their wallets. 75 percent of respondents think that the German government’s economic support package is insufficient due to rising consumer prices.