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Flat Tax in Austria?

Published: October 6, 2012; 22:19 · (Vindobona)

The Austrian opposition party presented a “fair tax” model. The other parties criticized the proposal fiercely.

Flat Tax in Austria? / Picture: © Vindobona.org

The smallest opposition party BZÖ calls for a tax reform. The flat tax should bring an easier tax system, BZÖ´s chairman Josef Bucher argues. According to Bucher, a fundamental tax reform would boost economic growth and employment. A long-term tax reform which brings a tax relief for the middle class should be implemented right now, Bucher says. BZÖ proposes to impose a 10% income tax on low-income earners (below € 11,000 per year). , The normal tax rate should reach 39%, Bucher states.

The economist Margit Schratzenstaller (WIFO) explains that a 39% income tax quota would cause a tax relief for high-income earners only.

Also political opponents say that only high-income earners would benefit. Moreover, those countries that introduced the flat tax a few years ago now abolish it. In Slovakia, the income tax will be progressive. Until now, the income tax rate was 19%.

Finance Minister Maria Fekter demonstrates skepticism. The idea of BZÖ would lower tax intake by € 20bn, Fekter argues. Thus, the re-distribution may no longer be maintained, Fekter says. However, Fekter admits that the tax system should be adapted. The 36.5% tax rate for middle-income earners would be counterproductive.

At the moment, the average tax quota comes at 42% in Austria. In the EU, only France and Sweden have higher tax quotas.

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