Austrian government unveils ‘eco’ tax reform

Austria's government unveiled on Sunday what it calls an "eco-social" reform of the tax system, a key promise of the conservative-green coalition.

Austrian Chancellor Sebastian Kurz
Austrian Chancellor Sebastian Kurz introduced a tax on CO2 emissions on Sunday. JOE KLAMAR / AFP

Under the measures set out at a news conference by Chancellor Sebastian Kurz and several of his cabinet colleagues, Austria will follow the example of neighbouring Germany and introduce a tax on carbon dioxide emissions.

This is to come in from mid-2022 at a level of 30 euros ($35) per tonne, rising to 55 euros by 2025.

In order to offset the added cost of the measures, taxpayers will receive a “climate bonus”.

Reflecting the fact that more people in the countryside rely on cars, this “bonus” will be worth 200 euros annually for those in the most rural areas but only 100 euros for those in cities.

Kurz stressed several other measures that would “lower the burden” of taxation on working Austrians, including reductions in income tax and social security contributions as well as higher tax breaks for families with children.

Corporation tax will also fall from 25 to 23 percent by 2025 to encourage post-pandemic investment.

Vice-Chancellor Werner Kogler, head of the junior Green coalition partner, described the reform as “historic” and added it would lead to “less dirt in the air but more money in people’s pockets”.

An environmentally friendly tax reform had been one of the key pledges in the coalition agreement reached in January 2020 between Kurz’s right-wing People’s Party (OeVP) and the Greens.

Environment Minister Leonore Gewessler told reporters the tax reforms were the results of “long nights” of discussions between the two parties in recent days in which the details were thrashed out.

Green pressure groups gave the reforms a cool reception, with WWF Austria calling them a “weak compromise” and saying the measures had to be “much more ambitious in order to effectively reduce emissions”.

A statement from the group said the CO2 price needed to be higher and that an opportunity had been missed to abolish environmentally harmful subsidies.

When asked about the fact the carbon price is lower than many experts had demanded, Kogler said that “setting out on the path is more important than where the price is set initially”.

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Could presidential criticism lead to Austrian citizenship rule changes?

Federal President Alexander Van der Bellen has hit out at Austria's naturalisation process, saying "the hurdles are too high". But how hard is it to get Austrian citizenship - and will the criticism lead to change?

Could presidential criticism lead to Austrian citizenship rule changes?

Austria’s federal president Alexander Van der Bellen, who is eyeing a second term in office in the autumn elections, has said that the hurdles for citizenship are too high in the alpine country.

“Citizenship is a valuable asset. I think the hurdles for obtaining it are too high.”, he said in an interview with the newspaper Kleine Zeitung.

READ ALSO: EXPLAINED: How does Austria’s presidential election work?

Van der Bellen mentioned a case with a German citizen who has lived in Austria for 20 years and cannot obtain dual citizenship: “He can vote neither here nor there. And that is the European Union?”

Austria does not allow for dual citizenship of naturalised citizens except in very few cases (including naturalisation of those who are descendants of Holocaust victims).

This is one of the many hurdles to citizenship in the country.

What makes Austrian citizenship so difficult to get?

Citizenship through naturalisation, meaning you are not the son or daughter of an Austrian citizen, is particularly hard to get.

First of all, the majority of applicants will need to give up any other citizenships they hold. So, a British citizen taking Austrian nationality through marriage or residence time will have to give up their British passport.

READ ALSO: Which European countries have the toughest rules for gaining citizenship?

Besides severing that connection to a home country where people might still have many ties, this can lead to difficulties in matters of inheritance and property ownership, for example.

The naturalisation process is also long and expensive in Austria. In Vienna, the application costs €130. If successful, the new Austrian citizen can expect to pay from € 1,100 to € 1,500 just for the award – that doesn’t include costs with documentation, translation, and issuance of documents such as an Austrian passport.

The length of the process varies, but it can take more than a year for citizenship to be awarded.

The requirements will also be different depending on how long the person is legally an Austrian resident and what is their connection to the country.

READ ALSO: Reader question: Will my children get an Austrian passport if born in Austria?

For example, after 30 years of residence in Austria, you need to prove you are not a danger to the country and that you can support yourself.

You also need to prove German skills and pass a citizenship test.

The minimum amount of time of legal residency after which you can require citizenship is six years for people who fall into specific categories, such as legal and uninterrupted residence in Austria and possession of the citizenship of an EEA state, birth in Austria or German at a B2 level.

Will Austria change its citizenship rules?

It is improbable that there will be any significant changes soon. Despite Van der Bellen’s statements, citizenship laws are not within the federal president’s competence and mostly depend on legislative changes.

The party leading the ruling coalition, ÖVP, is against any changes, claiming that making the process easier would “depreciate” Austrian citizenship.

READ ALSO: ​​Why has naturalisation doubled in 2022 – and who are Austria’s new citizens?

Austria has recently seen a jump in naturalisation numbers, but that can largely be viewed as a one-off phenomenon after changes in the process for descendants of Nazi victims.

While junior partner Greens have been in favour of easing some rules, little is expected to happen with the ÖVP in power. The next parliamentary elections are set for 2024, though. If the SPÖ continues climbing in the polls, an SPÖ-Green coalition could push forward different rules.

Also, if the Red-Green-Yellow ruling coalition in Germany does succeed in easing naturalisation rules in the neighbouring country, Austria could see further pressure for domestic changes.

But that remains to be seen, mainly depending on the 2024 election results.