Achieving the 2.5-hectare land consumption target also requires tax incentives

"The fact is that land is the most valuable asset. If we carry on as we are, we will run out of agricultural land in 200 years' time. We may then have a wonderful industrial location, but no longer a place to live. A country without fields, without a future, cannot be the goal. The remaining natural space must therefore be protected. A large number of measures are now on the table. The WIFO study shows that tax measures to curb land consumption are essential", according to the appeal of the Chairman of the Management Board of Österreichische Hagelversicherung, Dr. Kurt Weinberger, WIFO Director Prof. Gabriel Felbermayr, PhD and the author of the WIFO study "Tax policy instruments to reduce land consumption in Austria", Dr. Margit Schratzenstaller.

This new study by the economic research institute shows that, in addition to spatial planning measures, a fiscal structural reform is needed to curb the massive consumption of land in Austria, including the earmarking of taxes for the renovation of old properties and the mobilization of vacant space.

"Soil consumption takes food off our plates"

The WIFO study "Soil consumption takes food off our plates" by lecturer Dr. Franz Sinabell already describes the urgency of limiting land consumption in order to curb the loss of food supply security. Because

• arable land decreased by over 72,000 hectares between 1999 and 2020.
• Converted into supply capacity, this decline means that within 20 years around 480,000 fewer people per year can be fed in Austria.
• At the same time, the Federal Environment Agency estimates that there are 40,000 hectares of vacant industrial, commercial and residential properties.

National problem

Soil consumption is a purely national environmental problem. It is therefore pointless to look for blame far from national borders. This situation urgently needs to be resolved at a national level in order to protect the natural balance and the cultural landscape and to maintain an efficient agricultural sector with productive agriculture. This is the only way to prevent dependencies in the form of food imports.

"Tax policy instruments to reduce land consumption in Austria"

In the new WIFO study "Tax policy instruments to reduce land consumption in Austria", the following measures are proposed to reduce land consumption from the current 11.5 ha to 2.5 ha per day:

• Mix of measures

according to the principles of avoidance (containment of rezoning), recycling (use of vacant buildings) and intensification (densification and use of areas designated as building land)

• Nationwide vacancy tax

One example of a concrete measure is the introduction of a nationwide vacancy tax. This would generate additional revenue for the state, which could be used to reduce land transfer tax, which hinders the efficient use of land and buildings.

• Municipal tax

The mandatory inter-municipal sharing of municipal tax revenue helps to reduce incentives for rezoning and curb urban sprawl.

The problem: "Every mayor has a system of incentives to grant permits for commercial centers because they generate income. But in Austria we already have the highest number of supermarkets per 100,000 inhabitants in Europe, namely 60. In Germany, with its more orderly regional planning, the figure is 40.

As a result, food prices are 15 percent higher here!

The solution: the municipal tax must be collected as a federal tax and distributed in line with (ecological) criteria as part of the financial equalization system," explains Weinberger.

• Zoning

Furthermore, the current toothless system of zoning changes at provincial level must be regulated more efficiently and independently by a regional planning advisory board that is not subject to instructions and approves rezoning for the municipalities.

• Earmarking of housing subsidies

The reintroduction of the earmarking of the housing subsidy contribution and the use of some of the funds for renovating old buildings can help to curb the vacancy rate

• Vacancy database

A mandatory vacancy database and the legal designation of particularly valuable agricultural land, as in Switzerland, are also concrete proposals

• Introduction of certificates

New instruments in connection with tradable area certificates or CO2 emission certificates

• Income Tax Act

The amendment to Section 6 of the Income Tax Act has already been implemented: If a vacant building of a commercial or agricultural business is rented out due to the closure of the business, the building is transferred from business assets to private assets - as with land - at book value instead of partial value as previously.

• Financial equalization

This can counteract land consumption. This is a great opportunity to change things for the better, to finally limit land consumption by law and to take careful use of fields and meadows into account in the financial equalization negotiations.

"Austria is still the European champion in soil consumption in a negative sense. This summer has once again demonstrated how quickly concrete surfaces can turn into heat islands and the power of water in the event of heavy rainfall and a lack of infiltration possibilities. There is therefore an immediate need for action," say Felbermayr, Weinberger and Schratzenstaller.

In our view, there is nothing to add to this.