Austrian Eco-Social Tax Reform Act

This case study examines the 2022 Austrian Eco-Social Tax Reform (Eco-Social Tax Reform Act 2022 (Ökosoziales Steuerreformgesetz 2022)) focusing on its policy drivers, design process, implementation dynamics, and distributional implications of the policy mechanism. The reform introduced a national carbon price alongside a broader tax package that reduced labour and corporate taxation and increased targeted tax credits. A central component was the Klimabonus, a per-capita transfer intended to compensate households for higher energy prices resulting from the CO₂ levy. In simple terms, while the reform aimed to internalise the cost of emissions by making polluters pay and thereby incentivising more sustainable behaviour, the Klimabonus was designed to offset these costs, ensuring that lower-emitting households would not disproportionately bear the burden of others’ emissions.