Austria's ÖVP Fear SPÖ Wealth Tax Plans

by Ulrika Lomas, Tax-News.com, Brussels

18 June 2010

One of the central issues debated during the Social Democrat’s (SPÖ) party conference, the issue of the “fair distribution” of taxes, has served to provoke unrest among Austria’s coalition government, with the People’s Party (ÖVP) expressing grave concerns that its coalition partner may well be harbouring plans for the introduction of a wealth tax, following the same model as that introduced by the party in 1993.

The SPÖ has announced plans to establish a working party, responsible to the country’s financial State Secretary Andreas Schieder, to examine several possible practical models for a wealth tax, while at the same time ensuring that, through tax allowances, the assets of low- and middle-income earners remain unaffected.

Under the wealth tax introduced by the SPÖ in 1993, total wealth on a specified date less tax allowances was subject to a 1% tax. At the time, taxpayers were required to produce a detailed declaration of their assets. According to the ÖVP, this would be an unacceptable intrusion into the private sphere.

Such fears may well be justified, however, particularly given the fact that Social Democratic trade unionists (FSG) have reportedly called not only for the reintroduction of an inheritance and gift tax in Austria, but also for the progressive taxation of wealth in excess of EUR500,000.

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