Austria’s tax landscape has been considered for years obstacle for economic development, but so far there have been no comprehensive reforms. An analysis entitled “Focus on Austria as a Tax Location” by EcoAustria on behalf of the economic advisor Deloitte shows how urgently there is a need for reform, especially against the background of the current economic crisis recession which increase the pressure to act. Harald Breit, CEO of Deloitte Austria, warns: “Austria as a business location is dramatically losing its attractiveness in international competition, and there is no end to the downward spiral in sight. If prosperity in this country is to be maintained, action must be taken now.”
According to Breit, in order to ensure the advancement of the business location, a reform is urgently needed tax system – “This is the only way to ensure competitiveness in the future.” From the companies’ perspective, such a reform must primarily include two aspects.
A central requirement concerns this Reduction of additional wage costsaccording to the study published in the summer Deloitte Austrian Tax Survey is supported by more than two thirds of companies. In addition, 40 percent of companies advocate a further reduction Income tax. Monika Köppl-Turyna, Director of EcoAustria, explains: “Our calculations make it clear that tax reductions in the labor factor are associated with positive employment and value creation effects amounting to around 30,000 people or 4.5 billion euros.” These measures could also Consumption and investment demand strengthen.
Reduction of corporate taxes
It is also essential to reduce the Corporate tax (KÖSt). According to the analysis, a reduction to the EU average rate of 21 percent from next year could benefit the economy Relief volume of around one billion euros. Despite the reduction from 25 to currently 23 percent, the competitive advantage originally created in Austria has now been lost. Herbert Kovar, Managing Partner Tax & Legal at Deloitte Austria, emphasizes: “This not only creates new scope for investments and innovations, but also would Emigration of companies moving to low-tax countries.” In addition, a lower corporate tax could attract international companies.
Financing options
However, a comprehensive tax cut requires one Counter-financing. See Deloitte and EcoAustria Savings potential especially in bureaucracy and administration. Efficiency improvements in areas such as public administration, health and education could free up up to 10 billion euros. Harald Breit demands one Federalism reform and changes in Financial equalization systemto ease the burden on the budget. Further measures could include a gradual increase in the Pensionsantrittsalters or the abolition ineffective support programs such as educational leave.
Again and again the introduction of one Property tax discussed, but EcoAustria warns of their negative effects. “The introduction of a classic wealth tax would be one in 2030 Loss of value creation for Austria of 4.3 billion euros,” explains Köppl-Turyna. The expected one Budget improvement of 3.3 billion euros would be disproportionate to the economic damage.
Conclusion
The analysis shows that relieving the burden on labor and companies, accompanied by savings in inefficient areas, could sustainably improve Austria’s competitiveness. Harald Breit urgently calls on politicians to take action: “We have been trying to take those responsible for years to wake up. Unfortunately, not enough has been done so far.” The measures presented could strengthen the business location and secure long-term prosperity.