Austria May Introduce Controversial Water Tax to Cover €250 Million Power Plan
The Austrian government is considering introducing a new “water tax” to help fund a low-cost industrial electricity tariff planned for 2027. The proposal has already sparked strong political backlash, especially in western federal states that rely heavily on hydropower.
Starting January 1, 2027, the government wants to offer industrial electricity at a reduced price of 5 cents per kilowatt-hour to strengthen Austria’s position as a manufacturing and production hub. This measure is expected to cost the federal government around €250 million every year.
To cover this cost, officials are discussing an additional contribution from the energy sector. One of the main ideas under review is a levy on older hydroelectric power plants that have already been fully paid off. This so-called “water tax” would mainly affect hydropower companies operating in states such as Tyrol and Vorarlberg.
According to reports from Ö1 morning news, the plan is being discussed as Finance Minister ماركوس مارترباور prepares to present the country’s two-year budget in parliament in early June. Both the Finance Ministry and the Economics Ministry declined to comment on the reports, saying budget negotiations are still ongoing.
Vorarlberg Governor ماركوس فالنر strongly criticized the proposal, calling it an “attack” on the finances of the western part of the country. He said the tax would be like a raid on the pockets of the state-owned company and ultimately on every resident of Vorarlberg, describing the idea as unacceptable.
Since major hydropower companies such as TELAG, KELAG, TIWAG, and Illwerke are largely owned by regional governments, a water tax would indirectly reduce state budgets and transfer part of that money to the federal government to support industrial subsidies. Verbund, which also owns older Danube power plants, could also be affected.
Walter Boltz, former head of E-Control, said the idea has both benefits and risks. He explained that the main advantage is that the levy would not be directly added to household electricity bills, but the downside is that it would still make domestically produced electricity more expensive in an indirect way.
Boltz also warned that negotiations with state governments would likely be difficult. He said the states would probably demand financial compensation if the federal government imposed higher taxes on their power plants, making the political debate around the water tax far from simple.