The arithmetic game

How the ÖVP wants to finance its tax plans

At 46.8 percent, Austria ranks fourth out of 38 OECD countries in terms of the tax burden on labor.(Bild: Franz Neumayr)

The People's Party presents calculations for financing its tax plans. One expert sees good approaches, but also weak points. "The middle class falls by the wayside." 

The ÖVP has kicked off the election campaign with proposals for a billion-euro tax relief package. However, experts criticized that the proposals could not be financed. Now the ÖVP is revealing what the counter-financing should look like. One focus of the program is the reduction of non-wage labor costs. These are to be reduced by a total of 2.5 percentage points in five annual steps. Cost point: 0.75 billion per year or 3.75 billion euros in the final stage. This is to be financed by a reduction in unemployment insurance contributions and by transferring part of the Family Equalization Fund contributions to the federal budget.

3.75 billion euros

would be the cost of reducing non-wage labor costs. The ÖVP wants to reduce them by a total of 2.5 percentage points in five annual steps.

Expert sees too little relief in the middle
For Denes Kucsera from Agenda Austria, the reduction in non-wage labor costs is a good idea, but the financing is not fully covered. For example, surpluses in non-wage labor costs are earmarked for counter-financing. "It is questionable whether we can always count on surpluses."

Kucsera is also critical of the drop in the unemployment replacement rate from the current 55% to below 50%. A degressive unemployment benefit would make sense, but would have to start higher and drop from 65% to 45% over time. The economist completely rejects the ÖVP's planned reduction of the second and fifth tax brackets. This means that the top performers in the middle will miss out. "The third and fourth levels should be reduced," says Kucsera.