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Austria's FM Unveils 2011 Budget Bill

by Ulrika Lomas,, Brussels

01 December 2010

Following months of political wrangling and speculation, Austria’s Finance Minister Josef Pröll has finally unveiled details to the National Assembly of the country’s 2011 budget, designed to redress the public finances, and providing for significant cuts in expenditure and for a number of key fiscal measures.

Acknowledging the fact that budgetary negotiations between the two coalition parties had been long and hard, Pröll proudly referred to the “red-white-red’ budget as not only a savings package but also as a “future package”.

Presenting the fiscal measures in the budget, Pröll emphasized the need for employment to be worthwhile and for those with property not to be punished. Here, Pröll confirmed that the idea of property taxes, which he referred to as a burden on the middle classes and on working people, had been ruled out.

Among the key tax initiatives contained in the 2011 budget and outlined by the finance minister are plans for the introduction of a bank tax in Austria – a “sign of solidarity” Pröll stressed. The proposed new bank levy is designed to yield in the region of EUR500m for the government in additional fiscal revenues.

The government also plans to abolish the holding period for shares, to ensure that from January 1, 2011, profits from all stocks and shares are subject to a 25% capital gains tax. Defending the proposal, Pröll questioned why hard working individuals should be taxed more than short-term gainers from the financial markets. Pröll also confirmed plans to increase the taxation of interest earnings in foundations from 12.5% currently to 25%.

Determined to take account of the environment, Pröll revealed plans to introduce both an airline ticket tax as well as to increase the taxation of fuel. The government has also resolved to clamp down on tax fraud and to close existing loopholes, he noted.

Designed to reduce the country’s deficit next year to 3.2% of gross domestic product, the budget provides for savings of around EUR1.6bn in 2011 and for new tax revenues of approximately EUR1.2bn.

Examination of the budget is due to begin shortly, with a resolution expected on December 22.

TAGS: individuals | capital gains tax (CGT) | tax | investment | business | property tax | interest | equity investment | budget | tax rates | Austria

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