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Key points: What does Austria’s 2022 budget mean for you?

Austria's government on Wednesday presented its budget plan for the next year, with a much-discussed reform to taxes as well as other changes that will directly affect residents.

Finance Minister Gernot Blümel surrounded by media
German courses, a climate bonus and increased child benefits are some of the items in Finance Minister Gernot Blümel's budget proposal. Photo: BKA/Wenzel

“With this budget, we are setting the course for the future, out of the crisis,” said Finance Minister Gernot Blümel as he announced the 2022 budget in parliament.

After his first budget focused on Covid measures, he said the new one marked a turn to “sustainable budget policy”.

He said that the proposals would “leave Austrians with more money left in their wallet for living”.

But what exactly does that mean for your life in Austria, and your wallet? Here’s a look at some of the key measures in the 2022 budget.

Covid measures

Although the Finance Minister presented this as a forward-looking budget, the impact of the pandemic is still clearly felt, with €3.7 billion for care services, and €50 million for training nurses each year in the period 2022 to 2024, plus €3.2 billion to the healthcare sector to cover Covid-19 vaccine costs as well as preparations for preparing and coping with future pandemics.

Higher fuel prices

One of the key points of the budget was a so-called eco-social tax reform, described by Blümel as “the greatest transformation of the tax system in the Second Republic [since 1955]”. 

We’ll start with the eco part. A tax will be introduced on carbon dioxide emissions, starting at €30 per tonne in 2022, to rise incrementally over the next few years (€35 in 2023, €45 in 2024) before reaching €55 per tonne in 2025.

This means higher fuel prices, but how high exactly? According to estimates from Austria’s Economic Research Institute, you can expect a litre of diesel to rise by 10.1 cents in 2022, a litre of oil fuel to rise by 10.1 cents, and gas prices to rise by seven cents per kilowatt hour.

Climate bonus

Taxpayers will receive a bonus to help compensate them for the increased costs, which is staggered based on where you live, so that those in rural areas — who need to rely more on their cars — get more.

The bonus will range between €100 to €200 per adult (and half these amounts for children), based directly on public transport provision in your local area. The bonus is a particularly good deal in 2022, because it will be paid out for the full year even though the carbon tax only comes in in July.

One thing we don’t yet know is exactly how this money will be distributed to residents; the government is still working on the specific system.

Blümel said the intention was to offer “incentives” to those who are able to switch to more climate-friendly options, and not to “punish” those with no alternative.

“Someone who lives right in front of an underground train station will find it easier to act in a climate-friendly way that a commuter or a single mother in the countryside,” he noted. 

The eco tax is a key achievement for the Green Party, the junior party in the coalition, but has been criticized by environmental groups including WWF for not going far enough to make a real difference and help Austria reach its climate goals.

Income tax cuts

As well as introducing the carbon tax, the other major aspect of the tax reform are some income tax cuts.

From July 2022, the second band of income tax will pay 30 percent tax rather than 35, which Blümel said would mean up to an extra 650 extra in their pocket each year.

That will be followed a year later by lowering the third band from 42 to 40 percent tax, bringing savings of up to 580 per year.

Support for the unemployed

A total of €170 million is earmarked for a programme called the Corona-Joboffensive which aims to help job-seekers develop their skills, as well as €250 million for a programme called Springboard, focusing on supporting the long-term unemployed.

This was one area of the budget to come under criticism, with the Chamber for Workers and Employees (Arbeitkerkammer) saying unemployment benefits should have been increased.

German courses

The Austrian Integration Fund offers a range of German courses for foreigners, and €55.4 million was set aside in the budget to support these courses.

Sickness payment reductions

Those on low and medium incomes will see a reduction in the amount they pay towards their health insurance starting from July 2022, with a 1.7 percentage point drop.

Increase in family bonus

Good news for parents: the family bonus will be increased from €1,500 to €2,000, meaning up to €500 per child per year. 

Those who are eligible for Austria’s Kindermehrbetrag, an additional child allowance for low earners (those who do not earn enough to reach the income tax threshold) will also see these payments increase from €250 per year to €450.

Tablets for schoolkids

With over 10 billion earmarked for education in 2022, two focuses for schools were extending mental health support for students and ramping up digitalisation. 

By the academic year 2023/2024, the government has said that every student in grades 5-8 (usually 10-14-year-olds) would have an electronic device to use at school.

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AUSTRIAN CITIZENSHIP

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 in Austria doubled in 2022 – and who are the 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.

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