Austria mulls deferring carbon tax as inflation concerns grip market


Due to rising energy prices and public criticism, the Austrian government is considering delaying the implementation of carbon tax until October, reported Euractiv.

The carbon tax scheme, which was at first scheduled to come into force on July 1, will cost power plants 30 euros for a tonne of carbon dioxide emitted.

“In the midst of this serious (energy) crisis, the chancellor has the responsibility to ensure that the Austrian population is relieved from the burden. But unfortunately, the opposite is the case,” said Hans Peter Doskozil, the Social Democrats’ governor of Burgenland. The carbon tax, according to him, would be implemented at the wrong time.

The tax would increase the cost of heating and fuel for consumers. To compensate for the added burden, the government planned to introduce a regional climate bonus along with the carbon pricing.

This climate bonus involves the connection to public transport and the local infrastructure. People living in areas that cannot be reached by public transport or can only be reached with difficulty will receive a regional adjustment on top of a base amount of 100 euros.

However, the bonus will not be paid out until October, despite the fact that it was supposed to be issued before the implementation of carbon tax.

Given the surge in energy prices, business and industry have been advocating for a delay for months. Herbert Kickl, chairman of Austria’s Freedom Party, also called for a reduction or cancellation of such taxation which would only exacerbate growing inflation.

Austria is following Germany’s lead with the carbon tax, which was implemented at the start of 2021 to ensure that firms using climate-damaging fossil fuels pay additional costs.

The money is then transferred to the Energy and Climate Fund, which is dedicated to promoting the energy transition. The tax is passed on to the customers by the businesses involved, encouraging people to switch to more environmentally friendly options.

Austria’s carbon pricing, like Germany’s, will be raised on a yearly basis, eventually reaching 55 euros per tonne by 2025.

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