Agenda Austria calculates: The allocation of the last third of the cold progression should take place after inflation. The state would then profit again.
So the last third of the cold progression is distributed. The government has reached an agreement. An important part is the increase in the tariff levels, namely by 3.8 percent. Costs: 170 million euros. All taxpayers benefit from this.
The economically liberal “Agenda Austria” looked critically at the outcome for the “Krone”. Conclusion: “De facto, the cold progression has not been abolished.” The tax limits must be able to rise with inflation. That means that it should be five percent instead of 3.8.
“Election poker within the coalition”
For example: If current tax rates were to rise with inflation, an employee earning €4,000 gross per month would have €94 more in total next year. If all tax thresholds had increased annually with inflation since 2023, when the end of the cold progression came into effect, the same person would have €212 more in their account.
Franz Schellhorn, head of Agenda Austria, says that the last third is the stake in the election poker within the coalition. “But you have to say that 80 percent goes back to the taxpayer, which is considerable in pre-election times. However, the government distributes 20 percent as it sees fit.” There is, for example, the increase in the kilometer allowance for cyclists, which has nothing to do with the cold course. “This is purely a redistribution policy for the green clientele. “Both parties want to serve their clientele,” Schellhorn analyzes.
Even those who don’t pay taxes would be relieved. Schellhorn: “That’s typically Austrian. Anyone who doesn’t pay taxes can’t be hit by cold progression. That’s logical.”
Ask about “social graduation”
The union-affiliated think tank Momentum Institute complains that the compensation benefits the poorest fifth of incomes the least (2.2% of income) and the fourth fifth of incomes the most (3.2%), and recommends social distribution for the “variable third.”
Economist Schellhorn is certain that, depending on who is in government, they will stand up for their people and interests: “You have to admit that the Greens are doing it very efficiently. The Reds would probably have supported pensioners instead of cyclists.”
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.
