For days there has been discussion about how the last 1.2 billion euros that will be released as a result of the end of the cold progression could be divided. Now that the Labor Chamber and the trade union have also come up with a proposal: they want to relieve the burden on the lowest incomes, commuters and families must also benefit.
“Milestone”, “great achievement”, the “sex sacred cow”: the end of the cold progression from 2024 is one of the few flagship projects of the turquoise-green government. Two thirds of the EUR 3.65 billion this will free up will automatically be paid to those who pay income tax in Austria. The last third, about 1.2 billion euros, can be freely distributed by politicians. The government is obliged to take a decision of the Council of Ministers by September 15 that will clarify the distribution.
More money for low incomes
A stronger increase in the lowest tariff levels is very likely. At the moment it is said that the income limit, up to which employees do not have to pay income tax at all, will be increased from the current gross amount of 11,693 euros to approximately 12,500 euros. The Labor Chamber and the trade union can also benefit from this, but their demands go further.
They demand clear overcompensation for the bottom two tax brackets, as inflation hits the lower incomes hardest. In addition, the additional amount for children should be increased from EUR 550 to EUR 560 for families who cannot take full advantage of the Family Bonus Plus.
People who use their car for work should benefit by converting the travel deduction into a tax deduction. As a result, higher incomes would not receive more money from taxes in the future than people with lower incomes. The mileage allowance must be increased from about 42 cents to 60 cents for cars. In return, an ecobonus is intended to encourage people to switch to public transport.
The flat-rate income-related costs, the exemption for overtime premiums, the home work fixed amount, the exemption limit for the sixth of the year and the tax exemption will also be increased.
Experts see two scenarios
The Institute for Higher Studies (IHS) recently saw two scenarios how politicians could deal with the 1.2 billion euros: On the one hand, tax cuts for the lowest rate levels, because inflation affects people with lower incomes more. It would also compensate for the cost of living that has recently been paid in a lump sum, which would also have benefited the wealthy. On the other hand, according to the IHS, one could reduce marginal costs in middle-income earners and thus create an incentive for more full-time work.
The ÖVP, led by the responsible Minister of Finance Magnus Brunner, wants to discuss both variants with the Greens, who were more in favor of the first variant and social balance. The NEOS advocates compensation for middle earners. SPÖ and FPÖ called on the government to finally take effective measures against inflation.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
