One of Luxembourg's major building contractors was a guest on RTL Radio on Saturday afternoon.
Marc Giorgetti dismissed the concerns raised by the Robert Krieps Foundation earlier this week that so-called Specialised Investment Funds (SIF) were being used for tax avoidance schemes, stating that building contractors were "certainly" not taking advantage of anything. Giorgetti himself owns one of these funds together with associates such as the Lalux insurance company.
While he admitted that the added value of such a real estate fund was indeed not being taxed, Giorgetti argued that those bringing a property into the fund, only brought in property that had already been taxed. He also added that in contrast to a company, it was not possible to deduct fees and loans with a fund.
The building contractor stressed that if someone held more than 10% of the shares in such a fund, they would be taxed at 45%, if they were to take something out of the it. Giorgetti stated that this was the case with his own fund, i.e. if he took something out of the it to buy a different private property, he had to pay taxes. However, Giorgetti admitted that the bottom line was that SIFs were "a better deal".
The ongoing housing crisis
When asked about social inequality, Giorgetti again dismissed the issue. According to Giorgetti, people had to realise that Luxembourg's minimum wage was very high. However, he admitted that housing prices were indeed steep, and especially young people had a lot of issues finding a place to live. Giorgetti thinks that foreign investors are the cause of this problem, stating that the "rush" from abroad was "fierce".
A limitation of the prices to 2% per year, as was recently proposed by the Christian Social Youth (CSJ), was difficult to pull off, according to Giorgetti, due to construction companies having to pay indexed salaries which leads to construction work becoming more and more expensive. Instead, Giorgetti proposed "increasingly dense development". He also stated that he was in favour of imposing 20% of low-cost flats for some projects, instead of 10%. This, however, under the condition that buyers of such plots were fully aware of the deal they were making.
According to the Luxembourg Institute for Socio-Economic Research (Liser), 2/3 of Luxembourg City's building land is owned by 11 companies and 11 private individuals. Giorgetti defended himself against accusations of speculation, stating that his bulldozers were already running once the building permit came in. He also pointed out that he had to pay 1,600 construction workers. However, he admitted that he did not know whether other building contractors were holding back plots of land for the sole purpose of increasing their value. As such, Giorgetti stated that he also had nothing against a tax on unused building land within the development plan.
