Austria unveils carbon tax within tax system revamp

04 Oct 2021

Austria is introducing a carbon tax of €30 per tonne in 2022 within a tax system overhaul. The move will reward action that helps to protect the environment, whilst slashing corporate and income taxes, according to officials on Sunday.

Chancellor Sebastian Kurz referred to the tax cuts – amounting to a cumulative €18 billion up until 2025 - as the largest tax overhaul in the country’s modern history. The carbon levy will come into effect in the middle of next year, rising to €55 per tonne in 2025.

In addition, the government is set to offer so-called regional “climate bonuses” of €100 per year for people living in the cities and as much as €200 for those living in the countryside, where there is less availability of public transport.

"Less pollution in the air, more money in the wallet," Greens leader Werner Kogler said to a news conference.

Moreover, corporate tax rates will gradually decline to 23% in 2024 from the current 25% figure, whilst income tax rates for people in two income brackets will also fall.

Family "bonus" allowances will increase to €2,000 per child from the middle of next year, from the present amount of €1,500, whilst health insurance contributions for those on lower incomes will decrease.

Austria’s Finance Minister Gernot Bluemel said economic and jobs growth as a result of the initiative will help to pay for the tax cuts. Also, Austria’s debt to GDP ratio would fall gradually over the years.

Furthermore, from next month, people in Austria will be able to utilise public transport for the equivalent of €3 per day, within efforts to decarbonise the economy, reports the FT, with the new nationwide ‘Klimaticket’. The annual ticket will cost €1,095, covering rail, metro and bus networks.