Targets and Options of Tax Reform: Taxes on Assets

Empirical studies have found that taxes on assets are among the most growth-friendly categories of taxation. This applies in particular to the inheritance tax, land tax, capital appreciation tax and the general capital tax. Replacing less growth- and employment-friendly taxes (such as those on income from work) by taxes on assets should therefore produce a positive effect on growth and employment. In Austria, however, the weight of taxes on assets has been declining in the long term, contrary to the international trend. If taxes on assets are to be used more extensively to finance state responsibilities and to compensate for revenue losses from lowering taxes on incomes from work, then the land tax and the capital appreciation tax are suitable for the purpose. A reform of the assessment procedure for the land tax in particular could generate substantially increased tax revenues.