Vienna: Austria will cut income taxes next year to spur economic growth as part of a Europe-wide push to create jobs and calm investor jitters over the conflict in Ukraine, Chancellor Werner Faymann told the Oesterreich newspaper.
The Social Democrat, who heads a coalition with the conservative People’s Party (OVP), said he had met new European Commission chief Jean-Claude Juncker in Austria this week and they agreed the challenge was to boost growth and create jobs.
“In spring we had a growth forecast in the EU and Austria of 1.6 per cent, which is now falling in the direction of 1.0 per cent,” he said in an interview printed on Tuesday.
“Exports are falling away due to the uncertainty surrounding Russia and Ukraine. No one country can counter this. This is something Europe as a whole has to do.” Faymann said details were still open, but experts were fleshing out proposals on how tax cuts could be implemented by mid-2015 to boost purchasing power.
“My goal is to have a tax cut volume of 4 billion to 5 billion euros” ($5.3-6.7 billion), Faymann said. A cut of 4 billion would generate 1 billion euros in revenue via added economic growth, he said.
Tax cuts have long been a bone of contention between the governing parties in Austria. Conservative leader and Finance Minister Michael Spindelegger has ruled out imposing new taxes to help finance cuts in income tax.
“We Social Democrats would like to finance 1.5 billion via a tax on millionaires, but are open (to the idea) if the OVP wants to refinance this via inheritance or property taxes,” Faymann said, adding administrative costs could be also cut by 1.5 billion.
