With a tax increase

SPÖ Tries to Pull a Fast One on Social Assistance Reform

Marterbauer wants to collect more money from higher-income earners.(Bild: APA/GEORG HOCHMUTH)

The SPÖ is not backing down from its push to impose higher taxes on high earners. Recently, it secretly slipped a provision into the social welfare reform bill that lowers the income threshold for the top tax rate from one million to 500,000 euros. The ÖVP immediately rejected this.

Along with the Ministry of Social Affairs’ draft bill, the SPÖ proposes that the top tax rate of 55 percent apply in the future to income portions exceeding 500,000 euros. Until now, this rate has only applied to income of one million euros or more. The current time limit, set to expire in 2029, is also to be removed, making the rate permanent. The proposal came from the Ministry of Finance, according to the Ministry of Social Affairs in response to a query from “Krone.”

Child allowance increase to be financed by higher tax revenues
This is intended to offset the also planned (and already announced) increase in the child supplement from the current 700 to 1,000 euros, which is also included in the present draft. The additional child allowance benefits those individuals for whom the so-called “Family Bonus Plus” cannot take effect—or cannot take full effect—due to an insufficient income tax burden.

It’s About “Targeted Relief”
“Since families in the lower income brackets are particularly affected by price increases for housing, energy, food, childcare, and education,” “a further increase in the additional child allowance to 1,000 euros per child per year is intended to provide targeted relief,” according to the explanatory notes accompanying the draft. According to the draft, the changes are to take effect starting in 2027.

Marterbauer wants to collect more money from higher earners.(Bild: APA/GEORG HOCHMUTH)

ÖVP clearly rejects the SPÖ’s plans
However, a decision is not expected. The ÖVP has clearly rejected the SPÖ’s proposal. “The social assistance reform is not financed through new taxes, but through a clear and fair principle: Those who have never contributed to the social security system should not receive full benefits from day one. That is precisely the core of this reform, and that is exactly how it is structured.

Anyone who now tries to link it to tax demands fails to understand both its logic and its objectives. After all, Austria already has a public-sector share of 55 percent and a tax-to-GDP ratio of 44 percent. Against this backdrop, it must be stated in no uncertain terms: “The last thing we need in Austria right now are new taxes,” said ÖVP Secretary-General Markus Gstöttner.