The cold progression is easily explained with an example. They get a pay rise to compensate for inflation. However, this puts you in a higher income tax bracket and means you have to pay more taxes. Because the tax brackets are not adjusted for inflation. So it’s inevitable that every taxpayer will feel the cold progression at some point. And always to his disadvantage. We’re talking about a billion-dollar business at the expense of taxpayers. The think tank Austria Calendar recently calculated the following: “Average earners who have only been compensated for inflation in the past five years earn 8.2 percent more today – but pay 11.8 percent more income tax.”
It has been promised for years that this obviously grotesque system will be straightened out and that the cold progression will simply be ended by adjusting the tax brackets to inflation. A stroke of the pen that governments and finance ministers have been promising for years, but have repeatedly broken with indifference. Instead, every government traditionally announces the “biggest tax cut of all time” to its citizens, which – precisely because of the cold progression – is reduced to mouse reforms after a few years. But then nobody talks about it anymore. So how about stopping this landlord-like behavior and not continuing to take people for idiots, especially at the current level of inflation? Many earn their money hard enough, and they deserve to be treated fairly when it comes to taxation.
Few politicians still enjoy credibility on this issue. the MPs Gerald Loacker (NEOS) has been tirelessly attacking this system for years, for example. In a factually prepared motion for a resolution brought the business spokesman for NEOS together with his party colleague Karen Doppelbauer the cold progression back to the parliamentary level: “The Federal Government, in particular the Federal Minister of Finance, is requested to immediately submit a government bill to the National Council that abolishes the cold progression by transferring the tax tariff levels of § 33 Para. 1 EStG 1988 to the be linked to inflation.” This application was promptly rejected with the votes of the ÖVP, Greens and SPÖ. The rejection of the SPÖ was all the more surprising, since shortly before that representatives of the Chamber of Labor who were close to the Social Democrats publicly in favor of abolition had. The government had already government program found “clear words” on cold progression. Page 57 reads: “Review of an adequate adjustment of the limit amounts for the progression levels on the basis of the inflation of previous years, taking into account the distribution effects”. So basically what Gerald Loacker called for: checking and implementing.
In 2017, the then SP/VP government planned to finally ship this relic from the days of landlords to where it has belonged for years: to the archive. This topic has only received additional fuel in recent weeks through various chats that have reached the public. In any case, the government at the time succeeded Christian Kern (SPÖ) and Reinhold Mitterlehner (ÖVP) failed to put their plan into action. So the taxpayers are exposed to the supposedly generous acts of state in which the respective government enjoys the spotlight it has thrown itself, also known as “tax reform”. Fairness, reason and transparency, on the other hand, remain unnoticed in the second row. We will feel the consequences more and more clearly if inflation continues at this rate. But we are only citizens, petitioners and payers.