Tax credit policy in the UK and its lessons for Austria




Zaidi, A. (2008). Tax Credit Policy in the UK and its Lessons for Austria. Policy Brief 1/2008. Vienna: European Centre.


This Policy brief summarises the policy experience of the tax credit system in the United Kingdom, with the aim to understand better the challenges underlying the tax credit policy to be initiated in Austria. Perhaps the strongest message for Austria is: "keep it simple", as the benefit simplicity will help to effectively implement, monitor and evaluate the experience of the tax credit policy. It is also imperative that a good and tested IT system is put in place before introducing the scheme. The success of the tax credit policy in Austria will also depend on the contextual factors, such as the interplay with other tax and benefit and labour market policies, wage setting arrangements, etc, and more background research on the effect of these factors will be useful. A pragmatic approach would be to introduce, in the first instance, a tax credit scheme for specific subgroups, such as lone parent families and working age persons with disabilities.