Austrian Unions Eye Wealth Tax Package

by Ulrika Lomas, Tax-News.com, Brussels

24 January 2012

During the course of a recent joint conference, the Austrian Federation of Trade Unions (ÖGB) and the Austrian Labour Chamber (Arbeiterkammer – AK) underlined the need for both expenditure- and revenue-based measures to be included in the coalition’s planned EUR10bn (USD13bn) consolidation package.

Warning against the introduction of any measures that might merely serve to endanger growth or jobs in Austria, the organizations put forward a series of targeted tax proposals, expected to generate additional tax revenue totalling around EUR4.5bn.

Among the key proposals outlined in the joint strategy include plans to combat tax evasion, to generate around EUR300m, to increase the top rate of income tax to 55% instead of 50%, applicable to annual income in excess of EUR200,000, to yield EUR115m, and to close existing tax loopholes in the country’s corporate tax system, to reap EUR400m, or, as a suggested alternative, to increase the rate of corporation tax from 25% currently to 28%.

Other key recommendations include plans to provide for the non-deductibility of executive pay above EUR500,000 (to raise EUR35m); to subject capital gains from real estate to a 25% rate of income tax, excluding a main residence (EUR400m); to increase the heavy goods vehicle tax (EUR80m); and to introduce a property tax (EUR400m), inheritance and gift taxes (EUR300m), a wealth tax (EUR0.5bn-EUR1.5bn) and a financial transactions tax (EUR0.5bn-EUR1.5bn).

The ÖGB/AK joint strategy reflects the views expressed recently by Austrian Chancellor Werner Faymann, who insisted that wealthy individuals in Austria contribute a fair and substantial amount to budgetary consolidation.

The Austrian Chancellor recently confirmed his support for his party’s proposals, namely for a tax imposed on property wealth, for an inheritance tax imposed on inheritance outside of family members, and for a solidarity tax on top earners in Austria. These are Social Democrat (SPÖ) proposals, he made clear, while at the same time alluding to anticipated additional revenues generated by a tax on financial transactions, which, he stated, will hopefully be introduced in the European Union from 2014.

Austria’s five-year budgetary consolidation package, amounting to around EUR10bn, is to be agreed by the end of February following careful examination of both expenditure-based and revenue-based measures.

The proposed EUR10bn package will aim to reduce the country’s deficit by around EUR2bn annually until 2016.

The government’s EUR10bn tax and savings package is expected to be adopted by the National Council at the beginning of March.

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