Macroeconomic Effects of the Year-2000 Tax Reform

The year-2000 tax reform – together with the "family package" – will reduce the tax burden on private households and enterprises by ATS 32.5 billion on a medium-term basis. ATS 17 billion result from the loss of wage and income tax revenues due to the reform of the income tax-rate table, ATS 12 billion from additional transfer payments to families ("family package"), and ATS 3.5 billion from other measures taken to make Austria more attractive as a business location and to promote employment. Relative to the gross domestic product, this tax reform is more comprehensive than the 1989 and 1994 reforms. Its growth stimuli are derived, above all, from private consumption. Overall, the reform will result in a medium-term growth of GDP by 0.4 percent on a cumulative basis by 2005.