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Austria's U-Turn On Tax Hikes

Wednesday, March 10, 2010

Marking a dramatic about-turn, and despite previous – and repeated – assurances from Austria’s Chancellor and Finance Minister to the contrary, the government has now finally confirmed that taxes will inevitably have to rise in order to consolidate the country’s budget.

Although the government has made known its intention to increase taxes in order to generate an additional EUR1.7bn in revenue, the details pertaining to these tax measures remain as yet unclear. Austrian Chancellor Werner Faymann has, however, made known that the increased fiscal burden will not be borne by the masses.

Following the recent Council of Ministers meeting held to discuss the country’s forthcoming budget, the Finance Ministry revealed that the aim of the budget is to consolidate the public finances by focussing primarily on cuts in expenditure. To achieve its ambitious targets, the government is planning a 60% cut in spending and a 40% increase in tax revenue, it noted.

Commenting on the meeting, Austria’s Finance Minister Josef Pröll announced that the government had laid an important milestone on the road towards a sustainable future. Regarding future initiatives designed to generate additional tax revenue for the government, Pröll explained that the details would be finalized by the autumn. The proposed tax initiatives must be socially acceptable, economically sound and financially sustainable, the Finance Minister concluded.