The finance committee decided Monday to abolish cold progression. The creeping tax increase will therefore be abolished as of 1 January 2023. In concrete terms, this means that more will be left over from wages in the future. Until now, taxpayers were liable for tax from an income limit of 11,000 euros – next year this limit will be 11,693 euros. For example, all tariff levels will rise in line with the inflation value in the coming years.
The IHS and WIFO have presented a tax progress report as the basis for the inflation survey. This report shows inflation at 5.2 percent for the period July 2021 to June 2022. That means that people will be relieved by 1.85 billion euros next year with the abolition of cold progression.
Treasury Secretary Brunner: “An act of honesty”
“By abolishing cold progression, we put an end to the gradual tax increase. We give people back money that inflation has taken from them. In this way we relieve the Austrians in the long term. It is an act of fairness that the working people affected by the massive price increases have more net than the gross,” Treasury Secretary Magnus Brunner (ÖVP) said of the decision.
Non-wage labor costs are also reduced
In addition, a long-standing demand of the economy is being realized: the reduction of indirect labor costs. The 0.2 percent reduction in the contribution to the Family Cost Equalization Fund (FLAF) will result in a saving of 1.5 billion euros in 2026. It has already been decided to cut accident insurance premiums by 0.1 percent. All in all, ancillary wage costs will be permanently reduced by a total of 0.3 percentage points from 2023 and Austria will be strengthened as a business location, according to the minister.
For the first time in 20 years, the turnover limits for the flat rate are raised in the field of agriculture and forestry. A maximum of 50,000 farmers will benefit from this: the flat-rate turnover tax will be increased from 400,000 euros to 600,000 euros and the flat-rate income tax will increase from 130,000 euros to 165,000 euros.
According to a current analysis by the budget service, the relative reception is highest in the order of magnitude of 2000 euros gross per month and will rise to 1.8 percent of net income by 2023. A full-time employee with 3171 euros gross per month will have 4100 euros more in his pocket in 2026, a pensioner with 1582 euros gross per month still has 3770 euros left.
Total relief of €20 billion
The total reception up to 2026 will amount to about 20 billion euros. The new rate limits for 2023 are: 0 percent to 11,693 euros (instead of 11,000), 20 percent to 19,134 euros (instead of 18,000), 30 percent to 32,075 euros (instead of 31,000), 41 percent to 62,080 euros (instead of 60,000); 48 percent to 93,120 euros (instead of 90,000). The abolition will bring about one percent GDP growth by 2026, an increase in employment to about 36,700 people and 20,000 fewer unemployed.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
