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Austria Mulls Wealth-Related Taxes In EUR10bn Package

by Ulrika Lomas,, Brussels

29 December 2011

Following intense discussions, Austrian Chancellor Werner Faymann and Vice Chancellor Michael Spindelegger recently united on plans for a five-year budgetary consolidation package, amounting to a total volume of around EUR10bn (USD13bn), 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.

According to the Social Democrats (SPÖ), in order to begin and to support negotiations, government working groups have been set up tasked with evaluating savings potential, for example in the area of administration, measures to increase the actual retirement age in Austria, as well as “socially just” wealth-related tax initiatives.

The party points out in its release that a separate working group, established within the finance ministry itself, is also examining the issue of “just” new sources of fiscal revenues.

As a yardstick for measuring the various individual proposals, Chancellor Faymann cited two criteria, namely improving the economic situation, and ensuring that the country is more socially just.

On the revenue side, Chancellor Faymann recently indicated that changes could be made to the existing system of group taxation in Austria. While underscoring that group taxation is a good incentive for many companies to invest abroad, Chancellor Faymann nevertheless suggested that the loss write-off period could be limited to three or four years.

Wanting to distribute the fiscal burden in the country in such a way as to ensure that everyone is able to contribute a fair share, Chancellor Faymann indicated that the ten-year period, after which no taxes are imposed on gains derived from property sales, could also be abolished.

As regards the possible reintroduction of inheritance tax in Austria, the Chancellor confirmed that such a move is currently being considered, albeit with a high tax exemption. Defending the idea, Faymann underlined that the financial and economic crisis has compelled the government to consider introducing extraordinary measures that it would not otherwise have envisaged. There is currently a great need to consolidate the budget, and therefore the government must act now, he stressed.

TAGS: inheritance tax | tax | mining | retirement | budget | group taxation | Austria

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