Austrian National Bank (OeNB) President Claus Raidl has called on the government to lower taxes on labour.
Raidl told Die Pressr today (Weds) the taxation burden on labour must decline. He called Austria’s income tax system as “insane”. International organisations like the OECD, the Organisation for Economic Co-operation and Development, and the International Monetary Fund (IMF) had criticised the country before because of its high income taxes.
The level of income tax varies depending on people’s profession and their salaries. Austria’s maximum tax rate is 50 per cent. The Social Democrats (SPÖ) consider increasing it by five per cent while their coalition partner, the People’s Party (ÖVP), want to keep it stable or lower it. The Alliance for the Future of Austria (BZÖ), a right-wing opposition party, also wants to slash the maximum tax rate. BZÖ boss Josef Bucher suggested a rate of 42 per cent. He said his faction would not approve a constitutional debt limit without such a reduction.
Raidl hit out at the SPÖ for focusing on trying to find out which taxes could be increased. The OeNB president, who has close ties to the ÖVP, called the Social Democrats’s strategy a “big mistake”. Raidl told Die Presse the coalition would do whatever it could to avoid an early end of their partnership due to low chances for success in elections. The next federal ballot is set to take place in 2013.
Analysts have said a collapse of the coalition was possible if it failed to sort out its internal disputes about the reform of the army and the health sector. Abuse of office investigations against SPÖ Chancellor Werner Faymann are shattering the climate in the coalition as well. Faymann is suspected of ordering Federal Railways (ÖBB) and motorway company Asfinag to pay for newspaper ads informing readers about initiatives of the infrastructure ministry he headed between 2008 and 2009.
Faymann dismissed allegations that he focused on securing positive coverage of his decisions as traffic and infrastructure minister by providing tabloid dailies with lucrative marketing deals and promotion contracts. The chancellor’s office is also accused of creating fake profiles on social networking website Facebook to boost Faymann’s popularity among young voters. In the meantime, a spoof profile called Failmann is garnering more and more fans on messaging platform Twitter.
Raidl said today the SPÖ-ÖVP must not abstain from carrying out structural reforms in the coming years. Speaking to Die Presse, the former Böhler-Uddeholm boss said the upcoming austerity package could consist of taxes as well – but only to an extent of 25 per cent. Raidl claimed that pension and health sector reforms were of greater importance. He explained that higher taxes could not improve the state’s budget in the long run. The OeNB chief warned that another savings package would be needed in three years’ time if tax hikes dominated 2012.
ÖVP Vice Chancellor Michael Spindelegger announced yesterday that his party wanted to focus on cost reductions and a more efficient provision of financial support to state-owned and private enterprises. Raidl said today the conservative party had to ensure it represented other groups of voters but public servants and farmers. “There has to be a discussion about why 97 per cent of farmers pay no taxes,” he told Die Presse.
Raidl said Austria’s mineral oil tax could be increased if the measure helped to lower income taxes. Higher taxes on car fuel could pump additional hundreds of millions of Euros into the country’s coffers due to steady demand at rising prices and an increase of car registrations. The ex-Böhler-Uddeholm CEO also appealed to SPÖ and ÖVP to consider the Federal Audit Office’s (RH) list of 599 suggestions of how the state could become more efficient in the next few years without dramatic spending cuts.