Eco-Social Tax Reform

Austria’s Eco-Social Tax Reform Promises “Climate Bonus”

The parties of Austria’s coalition government (ÖVP and Greens) have agreed on a grand prestige project: an eco-social tax reform. As of July 1, 2022, Austrians will pay additional taxes on CO2 emissions. The entry-level price is 30 euros per tonne, and it would then increase to 55 euros per tonne by 2025. As of 2026, the plan is to have an EU-wide CO2 emission trade network available for all areas of life.

As of July 1, 2022, petrol will be eight cents more expensive per liter, and diesel will be nine cents more expensive. On the same day, all Austrians will receive at least 100 euros “climate bonus” – or more, if they lived in more remote areas (children will receive half).

Taxes in, climate bonus out

The revenue from the CO2 tax is expected to reach around five billion euros by 2025. In 2022, however, they would only reach around half a billion, as the tax will only come into force halfway through the year. The CO2 taxes will go back to the people as a climate bonus by region. In 2022, there will be four levels of payouts – 100 euros, 133 euros, 167 euros and 200 euros per year and person in the first year. The exact calculation by region will still be made.

As the CO2 price increases, the climate bonus will also rise, and reach almost double as much by 2025, as the CO2 price will also increase to 55 euros, said vice-chancellor Werner Kogler (Greens).

The reform did not include abolishing diesel privilege or the reform of the commuter allowance as promised in the government program.

NGOs and activists not convinced

The government’s new eco-social tax reform has not exactly been met with enthusiasm by NGOs. The environmental organizations WWF, Greenpeace and GLOBAL 2000 said that the attempt to make the tax system more ecological did not go far enough.

“CO2 pricing this low cannot make any significant contribution to climate protection”, warned Fridays for Future.

Traffic lobbyists such as the Austrian Traffic Club (VCOe) and the Austrian motorists and touring association OeAMTC also criticized the reform.

The planned 30 euros per tonne of CO2 emissions was a “purely cosmetic price, which will not have any steering effect”, said Fridays for Future in a statement. This reform was not even close to what tens of thousands of people took to the streets for just over a week ago, they said. The organization demanded an “immediate improvement”, especially of the CO2 price and price development.

The WWF was slightly milder in its criticism, saying that CO2 pricing was an important step, but demanded a steeper pricing path, and a bigger eco bonus. They also said that postponing subsidy cuts that were damaging the environment was a “devastating signal”.

The VCOe said that the CO2 price was too low. This meant high costs for everyone and for future generations. The climate damage by 1,000 kilograms of CO2 cost 201 euros according to the office for environmental issues, said the VCOe. The government agreement said 30 euros per tonne in the first step.

Reported in cooperation with the Austrian Press Agency / APA.