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Austria's FM Isolated On Tax Cuts

by Ulrika Lomas, Tax-News.com, Brussels

19 December 2011


Increasingly isolated, Austria’s Finance Minister Maria Fekter has once again ruled out the idea of new taxes, insisting that the planned February savings package is to be achieved solely by means of introducing ‘good’ savings measures. The minister also categorically rejected the idea of changes to the country’s existing system of inheritance tax.

In a statement, Finance Minister Fekter rejected speculation that tax rises would form part of the coalition government’s proposed austerity plan, insisting that the EUR2bn savings package for next year will not be a “tax package”.

Defending her rigid stance, Fekter underscored the need for reforms and for structural changes to lead the country onto a long-term savings course, warning that simply scraping together money in the short-term will not suffice. She stressed that reforms next year will enable significant savings to be made, notably by introducing “good measures” to curb early retirement and to abolish golden handshakes in 2012.

Yet despite her bold assurances, the minister appears to be out on a limb, as discussions on the issue of new taxes are taking place not only within the ruling Social Democrat (SPÖ) party but also within the ranks of the minister’s own party, coalition partner the Austrian People’s Party (ÖVP).

High-ranking ÖVP members have put forward the idea of introducing a solidarity levy on the country’s top earners, by temporarily increasing the top rate of income tax for individuals with annual income in excess of EUR300,000.

Alluding to such a measure as “immoral”, however, Fekter explained that SPÖ plans for new taxes, including a millionaire's tax, would merely serve to damage Austria as an economic location and stressed that she would not let that happen under any circumstances.

The Austrian government plans to draft the savings plan by the beginning of January, in order for the package to subsequently be agreed in February.

TAGS: individuals | inheritance tax | tax | retirement | Austria | individual income tax

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