Austria's Kurz Plans $14 Billion of Tax Cuts to Boost GrowthBy
People’s Party wants to lower tax, contribution rate to 40%
Kurz wants to reduce public debt to free funds for investments
Sebastian Kurz, the conservative candidate in Austria’s October election, wants to jump start the economy by lowering taxes and other costs by at least 12 billion euros ($13.5 billion) a year to help companies invest and create jobs.
“Austria has lost ground as a business location in recent years,” the 30-year-old Kurz, who is now foreign minister, said in a telephone interview. “We need to reduce the tax and contribution rate at least to 40 percent from the current 43 percent.”
Austria will hold early national elections on Oct. 15 after Kurz, chairman of the People’s Party, ended a coalition with the Social Democrats. The two parties had been at odds over a range of topics including taxes, migration and education before Kurz decided to let the public settle the disputes with a snap vote. The Social Democrats, led by Chancellor Christian Kern, wanted to wait until regular elections due next year.
Kurz also wants to review the nation’s immigration policy and limit the number of people seeking to take advantage of a welfare system that is among the most generous in the world. Kurz says that Austria is attracting low-skilled workers who claim state benefits once they lose their jobs. Instead, the country should strive to attract highly skilled workers from around the world, he said.
Companies including steelmaker Voestalpine AG have said investment decisions in Austria depend on factors such as tax rates and the availability of skilled workers. Voestalpine is due to decide later this year on whether to refit a plant in Kapfenberg at a cost of hundreds of millions of euros.
Austria for years boasted the lowest unemployment rate in the European Union but has seen the jobless rate tick up recently as migration from Eastern Europe and refugees from Syria and Afghanistan swelled the workforce. Austria’s EU-harmonized unemployment rate stands at 5.5 percent, compared with 3.9 percent in Germany.
Kurz said he also wants to reduce tax fraud and the abuse of public subsidies to help the government balance its books, with the debt-to-GDP ratio forecast to reach 83 percent this year.
“We have to bring this number down again,” Kurz said. “Austria is raising enough tax revenue. Our problem is more on the spending side where bureaucracy and ill-targeted welfare payments are weighing on the budget.”
The government’s interest payments are hindering investments in the public infrastructure and make it harder to finance the welfare state, he said.