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Economist Urges Austrian Financial Tax

by Ulrika Lomas,, Brussels

07 May 2010

Eager to express his utter discontent at the tax plans proposed by Austria’s coalition government, with discussions currently focussing on eco taxes and wealth taxes, President of the Austrian Federal Economic Chamber (WKÖ), Christoph Leitl, has firmly stated that no new taxes should be introduced in Austria – with the exception of a financial transactions tax.

In a joint appeal, Leitl, Head of the Austrian Institute of Economic Research (WIFO) Karl Aiginger, and former Finance Minister Hannes Androsch beseeched the government to end the ongoing political wrangling regarding consolidation of the country’s budget, which, they maintain, is ultimately proving extremely damaging to Austria as a location.

According to the three prominent economists, the government must move away from individual measures and focus instead on making plans to secure a package for the future, which will enable the budget to be consolidated without the need to raise taxes. By making full use of the possible savings potential, the government should be able to meet its budgetary consolidation requirements for the next few years (from 2011 to 2013), without introducing new taxes, they maintain.

If, however, every effort has been made to improve efficiency and cut costs but additional revenue is still required, Leitl has advocated the introduction of a financial transactions tax – at European level. According to Leitl, a 0.15% tax levied on all financial instruments (including stocks and shares and derivatives), traded both on and off the stock exchange, could serve to generate in the region of EUR1.5bn in additional revenue for the government, proving more beneficial than a bank levy.

In their joint statement, the economists also emphasized the need to introduce measures designed to stimulate growth, including further investment in education, research, and thermal insulation.

TAGS: tax | economics | fiscal policy | banking | financial services | budget | Austria | services

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