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Kurz, who is part of the Austrian People’s Party (ÖVP)

wants to help companies by cutting taxes. He
claims this will free up funds for investment and create jobs,
while helping to reduce the budget deficit.

The ÖVP has been the junior partner in government since
2006 when the Social Democrats (SPÖ) took the lead. In the
decade since, the Austrian government has enacted laws to
curtail banking secrecy, increased taxes on high earners,
raised capital gains tax and tried to implement an inheritance
tax (which was knocked down by the constitutional court in

The important differences are over the fine details of
policy, but “both parties want to lower tax on income and
wages, which will above all play into the hands of the
higher-earning 50% of the population”, economist and former
government adviser Stephan Schulmeister said in a video before
the election.

The ÖVP pledged to reduce the tax burden and opposed
the plans for a wealth tax and an inheritance tax. The party
set out its plans to bring the tax-to-spending ratio down to
40%. Kurz made it clear he wants to cut taxes by €11.7
billion ($13.7 billion) a year. This includes an overhaul of
corporate tax to ensure that retained profits are not

Austria’s debt-to-GDP ratio is expected to
reach 83% this year. Kurz has made the case for capping public
spending at the inflation rate. In his analysis, Schulmeister
has estimated that the tax cuts will mean slashing welfare by
at least €10 billion.

The SPÖ made inheritance tax a centrepiece of its
manifesto. The party proposed closing loopholes for
multinational companies and reintroduce inheritance tax on
estates over €1 million, alongside a new levy on wealth,
to raise funds for social care. The party also proposed tax
cuts of €5.4 billion, with a focus on
cutting rates for low-income earners and reducing social
charges for employers.

Normally, the ÖVP and the SPÖ would cut a deal to
form a grand coalition of the right and the left. Except this
time, Kurz has made a point of not ruling out a coalition with
the far-right Austrian Freedom Party (FPÖ) as the election
results came in. This would be a break with convention, as the
FPÖ has only been in government twice before.

Although it is still technically possible for the ÖVP
and the SPÖ to switch places in government, there may be
more common ground between Kurz and the FPÖ. “The
right-wing populist party is arguably his most plausible
coalition partner. This is not only because both
parties’ platforms focus on the immigration
issue,” Fabio Wolkenstein wrote on the LSE blog. “The ÖVP and
FPÖ also share much in common when it comes to other key
policy fields.”

As part of his campaign, FPÖ leader Heinz-Christian
Strache pledged to introduce tax reforms within
100 days of joining a new government. The proposal is to cut
€12 billion a year in taxes on businesses and individuals,
while abolishing the minimum rate of corporation tax and
reducing public spending on welfare. This is one area where
Kurz and Strache agree most.

In fact, Strache has claimed Kurz has ‘stolen’
his party’s ideas. “The programme Kurz presented
is almost identical to the FPÖ economic programme. We are
still waiting for the presentation of the
ÖVP’s own economic plan,” Strache told

At the same time that the FPÖ wants to lower taxes for
Austrian citizens, the party has called for a special refugee
tax. It would mean newly settled refugees would pay a rate of
10% on earnings in the country. Not only does the FPÖ want
a refugee tax, the party wants to exclude migrants from
claiming benefits until they’ve been in work for
five years.

On this front, the ÖVP has pledged to cap welfare for
refugees at €540, roughly €300 less than for
Austrian-born claimants, with the benefits cut off after five
years if the person has found employment. The party has said it
will support restricting benefits to new migrant workers, but
not for refugees. This is another area where the ÖVP and
FPÖ agree more than they disagree.

What the coalition will look like should be settled in a
matter of days. “Government negotiations will not be easy for
the Social Democrats or the People’s Party,”
former FPÖ presidential candidate Norbert Hofer has told
the press. “We know what we want and we will not join the
government at all costs.”

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