While the people of Austria are currently battling rising prices for food, electricity and petrol due to high inflation, the price hike is bringing additional revenues from VAT, payroll tax and income tax to the state in the billions. According to calculations by the liberal economic think tank Agenda Austria, which ran through various scenarios, between 7.5 and 11 billion euros could flow into the national budget this year and next. Even in the variant with the lowest assumed inflation, this corresponds to the magnitude of a major tax reform.
High inflation rates lead to an immediate increase in consumption-based taxes, such as VAT. As a result of rising wages, income from payroll taxes and social security contributions also increases. At the beginning of April, the Budget Council drew attention to this development.
Agenda Austria has now gone through three scenarios to see how this will affect the national budget. In the first, inflation is five percent in 2022 and three percent in 2023. In this case, the state could count on an additional income of 2.5 billion euros from wage, income and sales tax in 2022 and five billion in 2023. euros, so a total of 7.5 billion euros.
However, inflation is currently even higher. In a second variant, inflation percentages of six percent for 2022 and four percent for 2023 have therefore been assumed. The extra income for the budget then rises to EUR 3.1 (2022) or 6.3 billion (2023), a total of well over nine billion euros.
Assuming an inflation of seven percent for 2022 and five percent for 2023, there is even an extra income of more than eleven billion euros (2022: 3.7 billion, 2023: 7.5 billion euros).
“End cold progression”
According to the economist Marcell Göttert of Agenda Austria, the exemption provided by the most recent tax reform will be negated in a very short time. “Treasury Secretary Brunner should relieve people by significantly cutting payroll and income taxes and finally end the hidden tax through cold progression,” he demanded.
Source: Krone
I am Ida Scott, a journalist and content author with a passion for uncovering the truth. I have been writing professionally for Today Times Live since 2020 and specialize in political news. My career began when I was just 17; I had already developed a knack for research and an eye for detail which made me stand out from my peers.
