Tobacco, betting, e-cars

New government plans tax hike from the beginning of April

Cigarettes are already becoming more expensive, and now a further increase of 10 cents or more per packet is planned.

(Bild: K.-U. Häßler - stock.adobe.com)

The new three-party coalition government has barely taken office and is planning a number of significant tax increases, a draft shows. The government is targeting tobacco and betting in particular. Cigarettes therefore threaten to become more expensive again soon. However, the motor-related insurance tax for e-cars and VAT on PV systems are also set to increase.

The budget gap is huge and new revenue is needed. The new coalition of ÖVP, SPÖ and NEOS apparently wants to lose as little time as possible and is planning hefty tax increases in several areas. This is shown by a draft submitted to the "Krone". Intensive negotiations are currently underway. In any case, smokers are to make a major contribution to plugging the budget gap.

Next price increase to come
According to the draft, tobacco tax is to be increased. Bad news for smokers - because they are already facing an average increase of 30 cents per pack over the next few weeks. Now there could be a second price hike at the beginning of April. In concrete terms, it looks like this: The tobacco tax consists of a price element and a quantity element. While the price element decreases slightly year on year, the quantity element increases.

However, the reduction in the price element from 32 percent to 31.5 percent is now to be suspended. The minimum excise duty, on the other hand, is to rise from 163 to 175 euros per 1000 units. The industry is therefore expected to increase prices by at least 10 cents per pack.

Smokers hit by hefty increase
However, the government is planning a real hit for tobacco heaters: the tax is to rise from 180 euros per kilo to 339 euros per kilo, a tax increase of a whopping 80 percent! Wolfgang Streißnig, chairman of the tobacconists, fears in an interview with "Krone" that this will destroy the market, as prices will have to rise.

"Sales over the border will increase enormously," warns the lobbyist. According to insiders, tobacconists will lose 16 million euros per year due to the increase in cross-border sales of tobacco heaters, an average of 4,000 euros per tobacconist.

The new Finance Minister Markus Marterbauer is looking for additional revenue.

(Bild: HEINZ-PETER BADER)

Betting fee increases from 2 to 5 percent
The government is also targeting gambling. The government program already stated that the betting fee would rise from 2 to "up to 5 percent" from 2026, and now it is set to rise even faster. An increase to the full 5 percent is already planned from April 1. According to industry sources, this will increase the burden by 90 to 100 million euros per year, with the coalition expecting the measure to generate over 50 million euros for the rest of the year.

The fee is calculated on the basis of turnover, which corresponds to the stake for betting providers and is therefore relatively high. The Novomatic Group, which has the largest market share, is most affected. The sports betting association emphasizes that such a large and sudden tax increase would also jeopardize numerous sports sponsorships and cooperations. The industry's counter-proposal is to raise the tax to 3.5 percent in June and to 5 percent from January 2026, which would be economically viable.

Higher tax now also for e-cars
According to the ÖAMTC, owners of electric cars will have to pay around 65 million euros in additional costs from April if the government plan goes through. Specifically, the current exemption from the motor-related insurance tax is to be abolished. On average, this is likely to cost affected drivers 400 euros more per year. Hybrid cars already have to pay insurance tax on the part of the combustion engine. The official justification for this step is that the insurance tax is a compensation for the use of public space and that a special subsidy for electric cars is no longer really necessary.

Another 20 percent VAT for home PV systems
Smaller PV systems on buildings with a peak output of 35 kilowatts will become more expensive. The current 20 percent VAT exemption is to be abolished as early as April. The reason for this: Due to the brisk demand for these solar modules, the costs for the budget are getting out of hand; a return to normal taxation is likely to generate around 175 million euros more for the tax authorities this year alone. Anyone still wanting to install a PV system will therefore probably have to revert to the previous model of subsidies via the green electricity settlement agency OeMAG, which is much more complicated for consumers.