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Austrian government unveils ‘eco’ tax reform

Austria's government unveiled on Sunday what it calls an "eco-social" reform of the tax system, a key promise of the conservative-green coalition.

Published: 3 October 2021 18:08 CEST
Austrian Chancellor Sebastian Kurz
Austrian Chancellor Sebastian Kurz introduced a tax on CO2 emissions on Sunday. JOE KLAMAR / AFP

Under the measures set out at a news conference by Chancellor Sebastian Kurz and several of his cabinet colleagues, Austria will follow the example of neighbouring Germany and introduce a tax on carbon dioxide emissions.

This is to come in from mid-2022 at a level of 30 euros ($35) per tonne, rising to 55 euros by 2025.

In order to offset the added cost of the measures, taxpayers will receive a “climate bonus”.

Reflecting the fact that more people in the countryside rely on cars, this “bonus” will be worth 200 euros annually for those in the most rural areas but only 100 euros for those in cities.

Kurz stressed several other measures that would “lower the burden” of taxation on working Austrians, including reductions in income tax and social security contributions as well as higher tax breaks for families with children.

Corporation tax will also fall from 25 to 23 percent by 2025 to encourage post-pandemic investment.

Vice-Chancellor Werner Kogler, head of the junior Green coalition partner, described the reform as “historic” and added it would lead to “less dirt in the air but more money in people’s pockets”.

An environmentally friendly tax reform had been one of the key pledges in the coalition agreement reached in January 2020 between Kurz’s right-wing People’s Party (OeVP) and the Greens.

Environment Minister Leonore Gewessler told reporters the tax reforms were the results of “long nights” of discussions between the two parties in recent days in which the details were thrashed out.

Green pressure groups gave the reforms a cool reception, with WWF Austria calling them a “weak compromise” and saying the measures had to be “much more ambitious in order to effectively reduce emissions”.

A statement from the group said the CO2 price needed to be higher and that an opportunity had been missed to abolish environmentally harmful subsidies.

When asked about the fact the carbon price is lower than many experts had demanded, Kogler said that “setting out on the path is more important than where the price is set initially”.

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POLITICS

‘Laughing stock of Europe’: What’s the new crisis to hit Austria’s coalition government?

Austria's environment minister went against the government's will and voted in favour of controversial EU legislation. Chancellor Nehammer now accuses the minister of 'abuse of office'.

Published: 17 June 2024 13:50 CEST
'Laughing stock of Europe': What's the new crisis to hit Austria's coalition government?

It’s the latest crisis between centre-right ÖVP and its junior Green coalition partners. This one will make its way up to the European Court of Justice (ECJ), according to statements given by Chancellor Karl Nehammer (ÖVP) on Monday (17).

This is due to the fact that Austria’s Environment Minister Leonore Gewessler broke with coalition partners to help pass a controversial EU-level law. “I know I will face opposition in Austria on this, but I am convinced that this is the time to adopt this law,” Gewessler told reporters.

The Federal Chancellery promptly responded to Gewessler’s unilateral action: “Austria will bring an action for annulment before the ECJ,” it said. Her vote was “not in line with the domestic will and therefore could not be cast in accordance with the constitution”, the Chancellor’s office said.

READ ALSO: Europe warned it must do more to deal with climate crisis

Gewessler will be charged with suspected abuse of office, ÖVP Secretary General Christian Stocker announced in a press release.

“There is a suspicion that Leonore Gewessler is acting unlawfully and knowingly against the clear guidelines of the Constitutional Service and against the constitution with her approval of the ordinance – this constitutes abuse of office,” Stocker said.

What was voted?

At the core of the discussion is a controversial EU law known as the “EU nature restoration law”. The legislation mandates the restoration of at least 20 percent of the EU’s land and sea areas by 2030 to restore all ecosystems in need by 2050. This landmark bill aims to address the decline of Europe’s natural habitats, a significant portion of which are currently assessed as being in poor condition.

The legislation includes specific targets for various ecosystems, including peatlands, forests, grasslands, wetlands, rivers, lakes, and coral beds. Member states are required to improve at least 30 percent of these habitats by 2030, with this target increasing to 60 percent by 2040 and 90 percent by 2050.

The conservative ÖVP party has been against the regulations, consistently reasserting Austria’s abstention vote for two years now since the EU Commission presented the package that included the “nature restoration law.” 

But now, Gewessler’s rogue vote was crucial for the legislation to pass. Austria’s vote, which was a mystery until the very end, was decisive.

Although a clear majority of states voted in favour anyway, the necessary quorum of 65 percent of EU residents was only achieved because of Austria. In the end, 66.07 percent of the EU population voted in favour of the law.

Can Gewessler vote against the Chancellery decision?

That’s complicated, and the courts will decide. 

The Chancellor argues that Austria had already been notified to abstain, a position based on “a uniform opinion of the Regional Governments (Bundesländer), binding for the Federal Government under Austrian constitutional law, as well as the lacking consensus within the Austrian Federal Government ”. 

He means that Austrian states have also agreed not to back the proposal. However, in May, two states, Vienna and Carinthia, pulled out of this vote, as Der Standard reported. This makes it unclear, even among constitutional lawyers, whether there is still a “uniform opinion” and whether Gewessler would be bound by it, the report added.

READ ALSO: Why Vienna is a haven for wild animals – and where you can find them

Criticism from SPÖ and far-right

The SPÖ and FPÖ criticised Gewessler and Nehammer for their actions on Monday. The two had made Austria “the laughing stock of Europe”, said SPÖ climate spokesperson Julia Herr in a press statement. 

“What we are currently experiencing is basically the continuation of the last five years of black-green, only with tougher strikes because the election is approaching,” she said.

Meanwhile, far-right FPÖ leader Herbert Kickl demanded that Nehammer take responsibility for Gewessler’s “ideology-driven solo effort”. In his opinion, the law meant the “death” of domestic agriculture and the security of supply with domestic food.

The major environmental NGOs were very pleased with the approval of Gewessler’s EU nature restoration law: Greenpeace spoke of a “milestone” in a press release, the WWF saw “historic progress”, and Global 2000 saw an “important tool in the fight against the biodiversity crisis and the climate crisis”.

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