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Austria's tax on advertising is set to cost the industry around 100 million euros this year, writes the local media magazine Medianet and, understandably, the industry is not very happy about that.

Instead of measures put in place which would stimulate the market, they complain, the Austrian authorities are doing just the opposite. Introduced in the year 2000, Medianet says, the tax is unique and a barrier to the whole competitiveness of Austrian industry.

Austria's finance minister Grasser

 
Although local taxes were already in place, the 2000 ruling placed a uniform 5% tax on all advertising forms across the country, even in regions such as Tirol, where no such scheme was already in place. The country's trade association for advertising and marketing, Oesterreichische Fachverband für Werbung und Marktkommunikation (ÖFWM), points out that some of the circumstances of its introduction could be termed as questionable, while a variety of judgments made since as to what is and what is not covered have pushed the limits if interpretation.

Abolishing the tax, the ÖFWM calculates, would create 1,000 new jobs and add 0.1% to Austria's Gross National Product (GNP). Instead of advertising budgets working to boost the market, the 5% of those budgets that finds its way to the finance ministry is effectively acting as a brake on it.

Walter Ruttinger, spokesman for the communications industry, describes it as "burning money at double-digit rates of growth. Every month brings a sad, new record". During the first 6 months of 2004, media and customers paid tax amounting to €48.5 million, 11% more than in 2003 at a time when advertising spending has only risen by 4%. Latest figures show the amount has risen to just under €65 million with a figure of €100 million looking likely by year end.