A Nudge Towards Decarbonization
With the Klimaticket and their eco-social tax reforms, the Greens can claim not one but two policy achievements. But will they work?
Servus!
—and welcome back. The Greens can claim not one but two new policy achievements. First, last week, the holdout states of Vienna, Lower Austria, and Burgenland signed onto the Klimaticket, an annual pass which will grant holders access to train and bus services nationwide for a flat fee of €1,095. Second, after a marathon run of negotiations, the coalition finalized and unveiled its planned ‘eco-social’ tax reforms Sunday which include a new tax levied on carbon emissions.
The Klimaticket is a personal triumph for Leonore Gewessler, Austria’s environment minister who also controls the transport portfolio. The Klimaticket is not precisely what was promised during 2019’s general election campaign. The Greens ran on a “1-2-3-Ticket,” advertised as costing €365 per year for all public transport in one state, €730 for two, and €1,095 for the whole country. In the end, the cost of the lower tariffs will vary state-to-state: €365 in Vienna, €550 for Lower Austria and Burgenland combined, and €695 in Upper Austria.
Still, politicians in Austria have talked about something akin to the Klimaticket for years, and in the end, Gewessler will get the credit for having successfully navigated negotiations with the governors of Austria’s nine states to introduce a single and affordable nationwide ticket in a country where public transport is to a large extent devolved and regionalized. The Klimaticket is already on sale—6,646 were sold on day one—and will come into effect on October 26, Austria’s National Day.
The Klimaticket is a key policy and public relations victory for the Greens. Their eco-social tax reform plan, however: less so. The Greens were able to get their coalition partner, the People’s Party (ÖVP), to agree to a new levy on carbon set at €30 per metric ton in 2022, rising over time to €55 by 2025. This will result, among other things, in higher gas prices at the pump, larger heating bills in homes warmed by gas or oil, and additional costs for businesses large and small. The Greens believe all this will nudge people towards public transport, electric cars, and renewal energy, speeding up the decarbonization of the economy.
This carbon tax, however, will be offset by what chancellor Sebastian Kurz has described as the largest tax cut in Austrian history. Income tax rates will be slashed from 35 to 30 percent on income between €18,000 and €31,000 p/a and 42 to 40 percent on income between €31,000 and €60,000. Corporation tax will be cut from 25 to 21 percent. The family tax allowance will increase from €1,500 to €2,000 p/a. And taxpayers are set to receive a new “Klimabonus” of between €100 and €200 p/a depending on where they live and their access to public transport.
This is quite the price to pay for a carbon tax. The Greens have signed onto a rather conservative series of tax cuts whose main beneficiaries will be the ÖVP’s core supporters: those on high incomes, businesses, and rural car owners whose Klimabonus will compensate for additional fuel costs. In the end, these tax reforms may be self-undermining: What hope is there of nudging someone onto the bus when the gas in their SUV is in effect subsidized? Why should someone living in the country with a family home and one or two cars receive a larger Klimabonus than a public transport user residing in the city? And how can the state afford to expand the transport network when it is spending €18 billion on tax cuts?
Bis bald!
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Chancellery Raided
Investigators conducted searches early Wednesday morning of the ÖVP’s Vienna headquarters and the federal chancellery. The searches relate to the alleged purchase in 2016 of sexed-up opinion polling data which was then reported on by the newspaper Österreich and news channel Öe24. The ÖVP rejects all allegations and the presumption of innocence applies.
Stalingraz
The Communist Party (KPÖ) won September 26’s local elections in Graz, Austria’s second-largest city. The KPÖ captured 28.8 percent of the vote, ahead of the ÖVP on 25.9 percent. The ÖVP’s Siegfried Nagl, mayor of Graz for 18 years, resigned following the vote. If the KPÖ’s Elke Kahr is to become Graz’s next mayor, she will need the support of the local Greens and Social Democrats (SPÖ).
Bye Bye Blümel
A cabinet reshuffle is imminent and would see Gernot Blümel move out of the finance ministry and back into the chancellery, according to reports. Blümel would also resign as head of the Vienna ÖVP, to be replaced by the current interior minister Karl Nehammer who would also move to the defense ministry.