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Austerity: Unions Versus Industrialists

Published: January 21, 2012; 12:23 · (Vindobona)

The Austrian trade unions want to impose property taxes, the Federation of Austrian Industries seeks cuts in spending.

Austerity: Unions Versus Industrialists / Picture: © Flickr

The Austrian trade unions (ÖGB) and the Chamber of Labor (AK) presented their strategy for the restructuring of Austria´s finance. By 2017, tax intake could rise by € 5.4bn. Both organizations argue that the rise of public debt is due to the crisis in the financial sector. As a consequence, workers shall not bear the burden. Further cuts for retirees are rejected as well. However, beneficiaries of the pre-crisis should participate in the restructuring of the budget.

ÖGB and AK call for property taxes, inheritance taxes and for abolishing tax privileges for private trusts. Moreover, the top tax rate should rise from 50% to 55%. Furthermore, the group taxation, which has been introduced in 2004, should be limited. Finally, ÖGB and AK aim for a reform of the real estate tax and the speculation term for real estate. Mass taxes, like the increase of the value added tax, are defeated fiercely.

These proposals would bring € 1.2bn in 2012, the organizations underline. By 2017, the additional tax intake would range between € 7.7bn and € 10.5bn.

By contrast, the Federation of Austrian Industries (IV) and the Economic Association (Wirtschaftsbund) again repeated to restructure public finance solely through cuts in public spending. The general secretary of the Economic Association, Peter Haubner, argued that the claims of the trade union are “a unilateral class conflict”, “unfounded”. These suggestions would damage the Austrian business location as a whole. Austria does not need new taxes, Christoph Neumayer at IV underlined. There would be no problem of public revenues, but of publice expenditures.

For Neumayer, new taxes do not bring any economic growth. However, IV would support investments in education, research and infrastructure. But it would be necessary to reduce public debts, Neumayer states.

Haubner regards the Austrian tax quota to be much too high, especially compared to other European countries. The restructuring has to be effected through cuts in public spending. In the public administration, there is a saving potential of € 660m per year, Neumayer argued. Besides that, reforms in the retirement plan, the health sector and in the subsidy system must take place, Neumayer emphasized. “It is no strategy to say no to every reform.”, Haubner addressed the unions. “There is no alternative to reforms.”, Haubner concluded.