Austria Won’t Shy From Eco Tax Even as EU Suffers Energy Squeeze
Austria Won’t Shy From Eco Tax Even as EU Suffers Energy Squeeze
(Bloomberg) -- Austria signaled that Europe’s energy crunch, which has pushed up power and gas prices across the continent, won’t derail the country’s ambitions to curb emissions.
The nation’s government has announced plans to raise the cost of driving and heating with fossil fuels by introducing a so-called eco-social tax. The move comes as an energy squeeze grips the region, boosting costs for companies and consumers while testing the European Union’s commitment to its Green Deal.
“Rising gas prices are a reminder for the climate-related risks that are yet to come,” said Joel Toelgyes of the Momentum Institute, a Vienna-based climate and energy researcher. “The Austrian tax reform signals to the rest of Europe that the introduction of a socially acceptable carbon price is feasible.”
Record spikes in energy costs have prompted some to question the EU’s accelerated move toward carbon neutrality, with calls from several member states to support fossil-fuel power generation to avoid blackouts and shield consumers from sharp price swings. Options under discussion at the European Commission include reducing value added tax and excise on energy.
The architects of Austria’s new tax code want the reform to stem rising emissions from transport and industry, which risk potential EU fines worth billions of euros by the end of the decade.
Austria’s 18 billion-euro ($20.9 billion) tax package starts with a 30-euro-per-ton levy on carbon from July 2022, rising to 55 euros over four years. The higher burden will be offset by lower income and corporate taxes, as well as increased child support and access to public transportation.
The country’s business leaders, who initially opposed efforts to tax carbon, said the new code is “painful but designed with a sense of proportion,” according to a statement from the Chamber of Commerce. The chamber is seeking more clarity on how drivers should reduce their fuel consumption.
©2021 Bloomberg L.P.