If the situation does not improve, Hahn thinks that there could be another tripartite next year, "and that costs money."

MP Max Hahn from the Democratic Party (DP), the rapporteur of the 2023 budget, joined our colleagues from RTL Radio to discuss the upcoming budget sessions in the Chamber of Deputies.

Hahn will present the budget report on Tuesday, followed by a speech from the Minister of Finance on Wednesday, and a debate and vote on Thursday.

For the MP, "the budget is a huge social redistribution machine," pointing out that "47% of state expenditure goes to social welfare." For instance, said Hahn, through the extension of the energy bonus, the increase in the minimum wage, and various tax credits in this context.

Housing, however, remains a problem, according to the MP. While many subsidies exist, "people don't know about them," he admitted. He proposes the creation of an "online social office" so that "citizens who need it most can access it and find out about the aids to which they may be entitled."

Tax reform not financially feasible

Hahn acknowledged the importance of a tax reform but stressed that "we are currently unable to afford it." In recent years, the state has spent €3 billion to fight the pandemic as well as €2.5 billion to help residents and businesses overcome the current global crisis. "If we still had that money, we would have enough financial leeway to fund a tax reform for the next eleven years," Hahn said, adding that the 2017 tax reform cost "€500 million per year."

Depending on how well Luxembourg makes it through winter, the budget rapporteur would support certain tax relief measures,  stating that "if the situation allows it, I would be in favour of tax relief, for example in the form of a one-off adjustment of the tax table."

As for a possible increase in the highest tax rates, the MP pointed out that going from 42% to 45% would only result in €50 million of additional state income per year. Since a tax reform would cost €600 million per year, "nobody would really benefit from it," according to Hahn. His party also rejects the idea as a "symbol of solidarity" because it would come with the risk of harming the attractiveness of the Grand Duchy in terms of attracting and retaining talent from abroad. "The number of super-rich in Luxembourg is not high enough to justify such a tax increase," Hahn concluded.