The plan, which was due to go into effect in 2021, would cut income tax for earners in the lowest tax bracket from 25% to 20%. Austria is one of the first countries in Europe that have begun to allow nonessential stores to open, starting in mid-April, after much of public life was put on hold to combat the COVID-19 pandemic.
Austrian Finance Ministry spokesman Felix Lamezan-Salins confirmed to Law360 the discussion of the tax overhaul, including the idea of starting earlier with measures planned for 2021. He said the details remain to be worked out in the governing coalition, which is made up of the center-right People's Party and the Green Party. More information likely will be available in the coming weeks, Lamezan-Salins said.
His comments came after the country's premier, Sebastian Kurz, told a news conference in Vienna on Wednesday that part of his government's recovery plan for the country involves tax cuts for working people.
"These should not only come, but also come quickly," Kurz said, according to a recorded webcast of the news conference on Austria's public service broadcaster.
If the plan comes to fruition, it will be the latest of a number of tax measures that governments worldwide have taken to try to offset both the health and economic costs attributable to the outbreak of COVID-19, the respiratory disease caused by the novel coronavirus.
Countries have granted tax holidays, announced lower value-added tax for restaurants and allowed essential workers to collect bonus money free of tax. Austria recently also announced the elimination of value-added tax on medical masks.
Margit Schratzenstaller-Altzinger, an economist at the Wifo Institute, said that along with reducing basic income tax, Austria should consider relief for those whose incomes are below €11,000 ($12,000) and don't earn enough money to pay tax.
Reducing the basic income tax rate would be a useful element of a stimulus package, as would moving the date for the change forward to July 1, according to Schratzenstaller-Altzinger.
"This tax cut should be combined with relief measures for the lowest incomes, which don't benefit from a lower basic income tax rate," she said.
--Editing by Neil Cohen.
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