Austria adopts 3.2-billion-euro tax cut package

(VIENNA) - Austria's coalition government of social democrats and conservatives adopted a new tax reform package Tuesday, introducing reductions totalling 3.2 billion euros (4.14 billion dollars).

"The tax reforms will bring about total cuts of 3.2 billion euros and will come into force retroactively as of January 1, 2009," Chancellor Werner Faymann announced after a government conference in Sillian, in western Tyrol province.

The decision still has to be approved by parliament, which was expected to follow shortly on Tuesday, and Austrian tax-payers would begin feeling the cuts by April, he added.

The government approved the reductions for workers who earn between 1,500 and 5,000 euros per month in mind, added Faymann.

The reforms include tax rebates of about 2.3 billion euros and cuts of about 510 million euros for families, Vice-Chancellor and Finance Minister Josef Proell explained.

Families will now be able to ask for refunds of up to 2,300 euros per year and per child for childcare costs.

Enterprises and self-employed workers will also be tax-exempt on 13 percent of their income, up from 10 percent previously.

And donations to certain organisations and groups will become tax-deductible.

But environmental and animal-protection groups like Greenpeace and the World Wildlife Fund (WWF) protested Tuesday that they were not included in the measure and accused Proell of a lack of fairness.

The new package also calls for the abolition of privileges on company managers' stock options, which could land about 30 million euros per year in state coffers.

The government in addition announced an aid package for Austria's struggling health insurance funds, which have accumulated debts of some 1.2 billion euros.

Starting on January 1, 2010, these insurers will be able to draw from an aid fund with up to 100 million euros per year at its disposal, while another 150 million euros will be allocated every year for an initial three-year period to help erase some of their debt, on condition that they reduce expenses.