Objectives and Options of the Tax Reform. Advocating a Sophisticated Approach

The study analyses the current situation, objectives and options of the planned tax reform in Austria. The federal government envisages a volume of € 3 billion, mostly without any counterfinancing. Of this, 0.3 billion were already spent on reducing employee contributions to the social insurance system. About € 1 billion are allocated to increasing benefits for families and economic locations, so that just over € 1.5 billion are left to cover a tax reform. WIFO calculations show that this amount does not even suffice to compensate the inflation rate since the last rise in the income and wage tax bands, much less leave any margin for the urgently needed reform of a tax structure that impairs growth and employment, and that would improve the purchasing power of those earning lower incomes. If, on the other hand, a major reform of a volume of € 4 to 6 billion were aimed for, this would produce a significant net reduction of the tax burden while achieving a tax structure that promotes growth, is employment-friendly and strengthens citizens' purchasing power.