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Austria's Faymann Says Tax Reform Is First Priority

by Ulrika Lomas,, Brussels

23 December 2013

Austrian Chancellor and Social Democrat (SPÖ) party leader Werner Faymann has made clear that his number one priority is to reform the country's tax system, as soon as there is scope to do so. Chancellor Faymann emphasized that he will push for the fiscal reform to be financed by wealth taxes.

In an interview with Salzburger Nachrichten, Chancellor Faymann pledged, as a first step, to reduce the entry rate of income tax in Austria, and in so doing lower the tax burden on the country's low- and middle-income earners.

Conceding that he had hoped to implement the tax reform in 2015, the Austrian Chancellor emphasized that the economic situation has since deteriorated and is currently worse than initially forecast. It would therefore be unrealistic to fix a date for the reform, he stressed, while underscoring his belief that changes will be made in this legislative period – and the sooner the better.

The Government will then be in a position to discuss whether or not there is leeway to introduce additional tax relief for families, as sought by the SPÖ's coalition partner, the Austrian People's Party (ÖVP), Chancellor Faymann explained. Furthermore, he noted that the negotiations would also focus on plans to introduce the so-called "millionaire's tax," which he has long since championed. Counter financing the fiscal reforms makes sense, to close the gap between rich and poor, thereby ensuring fairness in the tax system, he reiterated.

Highlighting the fact that plans for the 2014 Budget are well underway, Chancellor Faymann insisted that this would simply not have been possible, if the coalition Government had not reached an agreement on key revenue- and expenditure-based measures.

All too aware of opposition to plans to raise certain taxes, such as the tobacco tax and insurance tax, and to limit tax breaks for top managers, Faymann nevertheless maintained that in difficult times, tough choices have to be made. Unlike many other countries, including rich nations, the coalition Government has not opted to raise value-added tax (VAT), however, Chancellor Faymann underscored, arguing that raising VAT would merely hit families in Austria hard, with the most vulnerable the most affected.

TAGS: tax | value added tax (VAT) | insurance | insurance tax | tax rates | Austria | tax breaks | tax reform | individual income tax | European Union (EU) | Europe

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