Measures decided by the tripartite are meant to “get us through a few months” during a crisis, Minister of Finance Yuriko Backes stated on Saturday during an interview with our colleagues from RTL Radio.
Structural changes, particularly regarding taxes, cannot be tackled during a crisis, Backes explained.
When asked about the “fierce” Labour Day demonstration announced by the Independent Luxembourg Trade Union Confederation (OGBL), the Minister stressed that the trade union “must be honest with people”. The politician from the Democratic Party (DP) insisted that it “is not true” that the agreement would make people lose purchasing power. According to Backes, the aggressive language used by the OGBL is “misguided”. She argued that the trade union should move on from this and that society as a whole should look for solutions to the many problems faced by Luxembourg.
The OGBL criticised the tripartite agreement for benefiting only a portion of the general public but all of the country’s businesses, regardless of whether they are profitable or not. In response, Backes remarked that it is true that all companies benefit from the wage indexation postponement since their planning security is strengthened. However, the Minister emphasised that it is “false” to suggest that the government is throwing out money to businesses left and right, pointing out that some aid programmes are explicitly targeted at businesses that are losing money due to rising energy prices. Backes also dismissed the criticism that banks are paying out dividends while workers have to do without a wage indexation by pointing out that those companies that are “doing well” are paying taxes. Half of the state’s expenses, which are social welfare measures, have to be funded and that money “has to come from somewhere”.
Trade unions as well as the Christian Social People’s Party (CSV) and other parties demand that tax tables should be adjusted for inflation. However, Backes stated that Luxembourg currently cannot afford a major tax reform because it would cost the state at least €500 million per year. When asked whether she could not raise the maximum tax rate to compensate for the losses, the Minister replied that times of crisis are “not the time to raise or lower taxes”. The same is true for taxation of capital, according to Backes, who said that all of this would eventually be discussed during the announced tax debate in the Chamber of Deputies. The only exception is the property tax reform, which is still scheduled to be presented as a project in autumn 2022.
Nevertheless, Yuriko Backes stressed that she would “see what we can do” to improve the situation of single-parents over the coming months.
