Finance Minister Gernot Blümel Defends Tax Reform

Finance Minister Gernot Blümel (conservative People’s Party, ÖVP) has defended the planned eco-social tax reform. “This is supposed to be a positive incentive and not punishment”, said Blümel on Austrian national ORF television on Tuesday.

He said that the government had set out to achieve four goals: To make sure that working people have more money in their wallets; to make environmentally damaging behaviour increasingly expensive; to set local policies that allow businesses to create jobs and grow; and to successively decrease the government deficit following the corona crisis.

As Metropole has reported, a range of climate experts and activists criticized the government’s pricing of CO2 at 30 euros per tonne, when the environmental costs are likely several times higher. If Austria fails to reach its climate goals through emissions reductions, it would be forced to compensate for its emissions financially – with the watchdog for public spending (Rechnungshof) estimating that the current underpricing of CO2 now could lead to a 9-billion-euro bill in future.

Blümel said he considered the calculation “highly dubious.” Aside from the CO2 pricing, there were many measures aimed at reaching the climate goals, including various subsidies and incentives that will encourage, for example, the switch to climate-friendly heating and the further development of public transportation in Vienna.

Revenues from the CO2 tax will be redistributed as a climate bonus. “The fact is that we give back what we take in,” said Blümel.

Austria shouldn’t have debates guided by jealously, he said, referring to Vienna’s criticism about the climate bonus, which will see a lower payout for individuals in the city compared to the countryside, where many rely on their cars to get around. He pointed out that public transport was “very well developed” in the capital city.

Opposition leaders remained unimpressed. According to the head of the Social Democrats (SPÖ), Pamela Rendi-Wagner, there were a lot of losers in the conservative-green government’s tax reform. “The people will be paying the money they get back themselves – and they are financing a tax bonus, namely lowering big company taxes,” she said on Austrian national television.

“The government would be well-advised to open the agreement and create a more socially viable package”, said Rendi-Wagner, whose party had been in favor of CO2 pricing. “The price per se is not decisive at this time.”

Reported in cooperation with the Austrian Press Agency / APA.