Mediaboss Marketing

30 March 2012

The Austrian national council has recently adopted the governments savings package, providing for savings between 2012 and 2016 of around EUR17.3bn (USD22.7bn) and for additional tax revenues of approximately EUR9.2bn, achieved predominantly by closing existing tax loopholes.

As the government plans to swiftly introduce the proposed tax measures, the savings plan has been split into two parts. The first part, providing for planned tax rises, is scheduled to enter into force from April 1, while the second part, containing a raft of savings measures, is due to enter into force a month later on May 1.

Although the governments revenue-based measures are to be achieved mainly by closing existing loopholes in the tax system, the coalitions savings package also provides for a 25% rise in the countrys existing bank tax to EUR625m a year until 2017, to finance the budgetary costs of supporting and securing the long-term survival of the Austrian Volksbank (VAG).

The savings plan also provides for an early lump sum taxation of private pensions.

Defending the governments plans in parliament, Austrias Chancellor Werner Faymann highlighted the fact that, in stark contrast to many other countries, Austria has been able to stabilize its state finances without recourse to either a rise in value-added tax (VAT) or to a cut in pensions.

Alluding to the fact that fourteen out of twenty-seven European Union (EU) member states have elected to increase VAT, Chancellor Faymann explained that the Austrian government had deliberately elected not to do so as such a measure affects the less well off and families most of all.

During the session, members of the opposition warned that the government would not be able to achieve its ambitious savings objectives. German Finance Minister Wolfgang Schuble has finally admitted that plans for an EU financial transactions tax, or indeed for any other European levy, are doomed to failure, and Switzerland is clearly reluctant to conclude a tax agreement with Austria, leader of the Freedom Party of Austria (FP) Heinz-Christian Strache pointed out.

Dismissing these claims, Chancellor Faymann underscored the need to generate fiscal revenues from the financial sector, insisting that Austria would continue to forcefully push for the tax.

Austrias Vice Chancellor Michael Spindelegger insisted that the envisaged withholding tax deal with Switzerland would go ahead.

Continue reading here:
Austrian Lower House Backs Savings Package