Austrian Government Pushes Back Corporate-Tax Cut to at Least 2023

(Bloomberg) -- Austria’s new conservative-Green government pushed back a planned corporate-tax cut until at least 2023, focusing instead on helping low- and middle-income families and incentives for de-carbonizing the economy.

At a two-day conclave ending Thursday, Chancellor Sebastian Kurz’s coalition agreed timelines for the introduction of measures in its program for government. Some 4 billion euros ($4.4 billion) of income-tax cuts and child-welfare benefits are similar to those planned by Kurz’s previous coalition with a far-right party, and will be phased in over multiple years to keep the budget surplus intact, according to Finance Minister Gernot Bluemel.

“We have decided that we will make the tax relief in steps, and of course within the existing budgetary margins,” Bluemel told reporters in Krems. “Because we also want to end the debt policies of the past.”

After his government with the nationalists collapsed last year, Kurz has set a very different course with his new environmentalist partners. While some conservatives grumble about the rise of the Greens, the tie-up in Vienna could offer a template for other European nations struggling to forge working majorities in an increasingly splintered political spectrum.

The Kurz administration has pledged to achieve climate-neutrality by 2040, while sticking to conservative budget policies, a restrictive line on immigration, and tough security rules. It will install a “task force” led by Bluemel and Green Infrastructure Minister Leonore Gewessler next month to develop a more encompassing ecological tax reform project.

The tax measures finalized Thursday include:

• The tax rate on the lowest income bracket will be reduced to 20% from 25% next year, equivalent to about 1.6 billion euros
• Rates on the next two brackets will be cut to 30% from 35%, and from 40% to 42% in 2022. The top two rates of 50% and 55% will remain unchanged
• The corporate-tax cut to 21% from 25% will come during the legislative period that ends in 2024, but not in 2021 or 2022
• A levy on flights out of Austria will be set at 12 euros for all destinations from 2021, an increase for short- and medium-haul flights, currently taxed at 3.5 euros and 7.5 euros respectively -- but a decrease from 17.5 euros for long-haul flights
• Car-sales tax will be increased and incentives given for less-polluting vehicles
• Road tolls for heavy trucks will be made more dependent on their emissions class

To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Iain Rogers, Chris Reiter

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