September 27, 2015 / 12:12 AM / 4 years ago

Austria urges debate on refugee spending and EU deficit rules

BERLIN (Reuters) - The rising cost of looking after refugees may scupper the budget plans of some European governments, and Brussels should consider exemptions for such spending under its EU deficit rules, Austria’s finance minister was quoted as saying.

Migrants wait for buses in Nickelsdorf Nickelsdorf, Austria, September 26, 2015. REUTERS/Leonhard Foeger

“The short-term costs are high but predictable. More critical is the question of the longer-term effects (on the budgets),” Hans Joerg Schelling told German newspaper Welt am Sonntag, in an interview published on Sunday.

He said a lot of refugees would stay in Europe, which meant governments had to build more houses and schools. “I have my doubts that the budgets that are being planned now will be sufficient,” the minister said.

Some economists argue that the increased number of refugees will lead to stronger domestic demand, and therefore higher tax revenue. “But you have to keep in mind that this growth push is financed with more spending and more debt,” Schelling said.

The minister said the European Commission should think about not counting such spending as normal expenditure under its deficit rules.

“There should be a discussion about whether the high costs for countries such as Germany or Austria and others for the humanitarian measures should be viewed as extraordinary one-time effects,” Schelling said.

German Finance Minister Wolfgang Schaeuble has said he still aimed to maintain a balanced budget this year and next. Some lawmakers have questioned whether that will be possible given the rising costs associated with the migrant crisis.

Chancellor Angela Merkel’s chief of staff ruled out Berlin raising taxes to cover refugee costs.

“We’ve promised the voters that there won’t be tax increases or other levies. We’ll keep that promise,” Peter Altmaier told Der Tagesspiegel in an interview published on Sunday.

Asked if Germany would support exemptions for such spending under EU deficit rules, a finance ministry spokesman denied comment.

Reporting by Michael Nienaber; Editing by Hugh Lawson and David Holmes

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