Why is Austria’s €500 climate bonus causing controversy?

In Austria, even the dead are getting help from the state to confront surging prices as Europe confronts an energy crisis following Russia's invasion of Ukraine.

Why is Austria's €500 climate bonus causing controversy?
Austria has been sending out bonus payments to millions of people - including some deceased. Photo: JEAN-SEBASTIEN EVRARD / AFP

Since the beginning of the month, Austria has been paying out €500 to each adult who has been resident in the country for six months in 2022 to help deal with inflation.

The broad criterium for payment means even those who have died but still are in the database of taxpayers are receiving the payments.

“It isn’t legally possible to recover them,” Environment Ministry spokeswoman Martina Stemmer told AFP.

READ ALSO: Reader question: What should I do if I haven’t received Austrian government’s €500 payment?

The relatives of some recently deceased Austrians have taken to the press to express their surprise they get to keep the money, and is adding fuel to the fire of controversy over the payments. Many also claim the payments should not be given equally, as they benefit thousands of high earners unnecessarily.

The liberal opposition party Neos on Wednesday called for a reform of the mechanism, denouncing “a waste of taxpayer money which is ending up not only in the pockets of high earners but the dead as well.”

The “klimabonus” or climate bonus was originally introduced to distribute to consumers some of the funds raised from a carbon tax on polluters, but the amount was increased to help compensate for the surge in inflation driven by a spike in energy costs following the Russian invasion of Ukraine.

READ ALSO: EXPLAINED: What is the ‘Vollmacht Klimabonus 2022’ letter everyone in Austria is receiving?

Every person who has been a resident in Austria for six months in 2022 will receive automatically the €500 payment (minors receive a €250 sum) either directly on their bank accounts or through a mailed voucher in the scheme that the government announced in May.

Millions of people are entitled to the payment, which the government has started sending in early September.

READ ALSO: When will Austria make the €500 anti-inflation payment and how do I get it?

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Fuel to become even more expensive for drivers in Austria from October

On Saturday, the new carbon tax comes into effect, making petrol and diesel in Austria more expensive. Here's what you need to know.

Fuel to become even more expensive for drivers in Austria from October

Austrian motor associations have already warned people to expect long lines at fuel stations ahead of October. This is because, from October 1st, the new CO2 tax will come into effect in the country, making fuel prices soar – again.

People filling up their tanks in Austria can expect the price of a litre of diesel (including VAT) to rise by € 0.099 and petrol by € 0.086, according to calculations made by the Austrian Institute of Economic Research (WIFO).

READ ALSO: ‘Mission 11’: Austrian government reveals tips on how to save energy and fuel

The difference in price increases is because the new CO2 tax of €30 per tonne has a more significant impact on diesel compared to petrol due to the higher CO2 content in diesel.

Fuel prices had already been on the rise since Russia’s invasion of Ukraine, as The Local reported. And the prices have risen more steeply in the Alpine country, which hasn’t put any price cap or lowered taxes, plus suffered with a damaged oil refinery in Lower Austria affecting supply.

The increases have contributed to growing inflation in Austria, which will reach double-digit in September, according to Statistic Austria.

READ ALSO: EXPLAINED: Why are fuel prices increasing faster in Austria than elsewhere in the EU?

The CO2 tax

The CO2 tax is part of Austria’s eco-social tax reform presented in 2021. CO2 emissions would be taxed at €30 per ton, making things like carbon-based fuel and heating more expensive in the country.

The reform brought in the “climate bonus” payment to compensate residents for the financial burden of the CO2 tax. The one-off bonus for Austrian residents would depend on the person’s place of residence and its connection to the public transport network.

This year, due to the rising inflation, the Klimabonus was set at €250 for everyone who lives in Austria, and a €250 “anti-inflation” payment was added to the one-off payout.

READ ALSO: Reader question: What should I do if I haven’t received Austrian government’s €500 payment?