Austrian chancellor calls for tax on rich in poll campaign

(VIENNA) - Austria's centre-left Chancellor Werner Faymann kicked off Saturday his campaign for re-election next year with a call for higher taxes and a commitment to the crisis-hit European Union.

Speaking at a party conference of his Social Democrats (SPOe), Faymann said he wanted to raise taxes on the wealthy and bring back an inheritance tax in order to improve "social justice" and curb the "excesses of capitalism."

"In order to increase the number of all-day school places... to 100 percent, we need 500 million euros ($650 million) per year," he said.

"This is exactly the amount that an inheritance tax... would generate."

Faymann, 52, chancellor of the wealthy EU and eurozone country since late 2008, is currently in a "grand coalition" with the centre-right Austrian People's Party (OeVP) led by Michael Spindelegger, who rejects higher taxes.

The next parliamentary elections in eight-million-strong Austria, which has the lowest rate of unemployment in the EU, are due in October 2013.

With both parties likely to face a strong challenge in the election from the far-right, eurosceptic Freedom Party (FPOe) under Heinz-Christian Strache, Faymann also said he was committed to the EU.

"We must stay together," he said. "Taking us out of the EU would lead us to isolation."

The conference in Sankt Poelten near Vienna was attended by senior centre-left European politicians including Martin Schulz, head of the European Parliament, and Sigmar Gabriel, head of Germany's Social Democrats.

Faymann was re-elected as SPOe chairman at the conference but support fell by a surprising 10 percentage points compared to 2010 to 83 percent. When he was first elected party boss in 2008 his score was 98 percent.

The FPOe immediately jumped on what it called an "incredibly embarrassing blow" for Faymann.

Faymann also said he supported Austria having a professional army. A referendum is due to take place on January 20 on whether to keep compulsory military service.