Austria Plans EUR4.1bn In Tax Rises

by Ulrika Lomas, Tax-News.com, Brussels

21 April 2010

According to a recent strategy report for 2011-2014, Austria’s coalition government aims to generate an additional EUR4.1bn in tax revenue by 2014.

For the first time, the strategy report provides an indication as to the precise scale of the government’s proposed tax plans over the course of the next few years. These include increased revenue of around EUR2.78bn for the federal government by 2014, in addition to EUR1.37bn for the states and local authorities.

Despite these ambitious tax plans, Austria’s coalition nevertheless remains deeply divided as to which taxes to raise. With the Social Democrats (SPÖ) intent on increasing wealth taxes, and the Austrian People’s Party (ÖVP) determined to raise eco taxes, the coalition are only currently united on plans to introduce a bank tax in Austria, which would serve to generate in the region of EUR500m.

Consequently, Austria’s Chancellor Werner Faymann (SPÖ) is at loggerheads with Finance Minister Josef Pröll (ÖVP). Faymann has unveiled detailed plans to introduce both a bank tax and a transactions tax on speculation from January 2011, as well as proposals to close, within a “meaningful timeframe”, tax loopholes for the country’s super-rich, by reforming foundation and group taxation, thus generating the EUR1.7bn required for 2011.

Faymann categorically rejected proposals championed by the ÖVP to increase value-added tax, and to increase fuel and eco taxes, adamant that he would not contemplate raising taxes on food or on heating costs, nor would he tolerate a brutal rise in petrol prices. Faymann insisted instead that the tax burden must be increased on the wealthy and speculators.

Recommended