A critical view

Critical view: “De facto not abolished”

End of the additional tax on cold progression: one third is allocated variably. This is also viewed critically.(Bild: stock.adobe.com/Yuliya)

Agenda Austria does the math: The allocation of the last third of the cold progression would have to happen after inflation. In this way, the state would benefit again.

The last third of cold progression is therefore distributed. The government has reached an agreement. An important part of this is the increase in pay scales, namely by 3.8 percent. The cost: 170 million euros. All taxpayers will benefit from this.

The liberal business newspaper "Agenda Austria" took a critical look at the result for the "Krone". Conclusion: "De facto, the cold progression has not been abolished." The tax thresholds would have to rise in line with inflation. This means it should be five percent instead of 3.8 percent.

"Intra-coalition election poker"
 One example: If the current tax brackets were to rise in line with inflation, an employee earning €4,000 gross per month would have a total of €94 more next year. If all tax thresholds had increased annually in line with inflation since 2023, when the end of cold progression came into force, the same person would have €212 more in their account.

Franz Schellhorn, head of Agenda Austria, believes that the last third is the stakes in the intra-coalition election poker. "But you have to say, 80 percent back to the taxpayer, which is remarkable for pre-election times. However, the government distributes 20 percent as it sees fit." For example, there is the increase in the mileage allowance for cyclists, which has nothing to do with cold progression. "This is pure redistribution policy for green clientele. Both parties want to serve their clientele," analyzes Schellhorn.

Even those who do not pay taxes would be relieved. Schellhorn: "That's typically Austrian. If you don't pay taxes, you can't be affected by cold progression. That is logical."

Call for "social graduation"
 The trade union think tank Momentum Institute, however, complains that the compensation benefits the poorest fifth of income the least (2.2% of income) and the fourth fifth the most (3.2%) and recommends social graduation for the "variable third".

Schellhorn is certain that, depending on who is in government, they will stand up for their people and interests: "You have to acknowledge that the Greens are doing this very efficiently. The Reds would probably have supported pensioners instead of cyclists."