Austria's SPÖ Favours 5% Tax On Top Earners

by Ulrika Lomas, Tax-News.com, Brussels

21 July 2010

Alluding to the fact that the number of millionaires in Austria has risen dramatically over the course of the past year, in spite of the economic crisis, Günther Kräuter, federal whip of Austria’s ruling Social Democratic Party (SPÖ), has called for the fiscal burden to be increased on the country’s top earners.

Kräuter has advocated the introduction of a 5% solidarity tax on individuals with annual income in excess of EUR300,000, emphasizing that in times of austerity, it is a question of social balance. A 5% contribution imposed on wages and income would be a clear signal that the country’s wealthy are also contributing, thus making the hardships associated with cuts in government expenditure more palatable, he argued.

Under Kräuter’s proposal, the 5% additional contribution would not just affect the top rate of tax, but would in fact be imposed on all tax rates applied to annual income in excess of EUR300,000. Consequently, the 36.5% income tax rate would increase by 5% to 41.5%, the middle tax rate would rise to 48.21% under the proposal, and the top rate of tax would rise to 55%. According to Kräuter, the introduction of such a tax on wealth could serve to generate in the region of EUR155m for the state.

Fiercely opposed to the plans, the SPÖ’s coalition partner, the Austrian People’s Party (ÖVP), has argued that the introduction of new taxes must be a last resort, emphasizing that first there must be expenditure savings.

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