Austria to Fund Health System with Tobacco Tax Hike
VIENNA (Reuters Health) - Austria's health service is to get an extra 85 million euros a year, funded by an increase in the tax on tobacco that will come into force in July.
The move, confirmed by Austrian Chancellor Wolfgang Schuessel on Wednesday, caused a storm of protest because the government had earlier pledged there would be no new taxes before the next election.
Opposition Social Democrats' Parliamentary President Heinz Fischer said the "no new taxes" pledge had been made on live TV and as a result the "credibility of the government has been badly damaged" by what was a "clear breach of promise."
The move was also unpopular among the general public. Nearly 38% of Austrians older than 15 are smokers.
But Schuessel defended his government's position, saying it had been forced to act because of an EU directive, or law, forcing all member states to maintain tobacco taxes at the same level. He added that the extra money was part of the government's plan to restructure the state health insurance system.
This included switching funds from health insurers with more money to those that were in difficulty, as well as more savings on the costs of medicines and the introduction of the electronic chip card to replace the current paper system of administering the health service.
According to Austrian Finance Ministry figures, the tax on cigarettes has risen by 40% in the country in the past 6 years, but is still only 55.4%, which is 1.6% below the 57% minimum level set by the EU.
Health Minister Herbert Haupt told Reuters Health: "The Europe-wide increase on tobacco charges in Austria will go straight into the health system. It will mean more money for the State health insurers and more money available for preventative medicine."
He added that the tax hike had in fact been delayed 4 months to ease the burden on the tiny Tabaktrafik stores that sell cigarettes. In Austria, these are mainly operated by people registered as disabled.
He also said that despite the criticism from the opposition, the move was one that could only be seen as positive.
"All the statistics show that more and more young people are turning to cigarettes. The health of our children should be our number one priority and that is why we should see this tax rise as something positive."