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On Monday morning, the Minister of Finance discussed Luxembourg's state budget and the prospect of targeted tax credits in an interview on RTL Radio.
Yuriko Backes argued that adjusting the tax table to inflation would "not be responsible" at the moment. With only two weeks to go before the upcoming tripartite meeting with the government's social partners, the politician from the Democratic Party has thereby made clear that she does not support one of the main demands made by unions.
She elaborated that Luxembourg is currently in an economic crisis and that from a structural point of view, the proposed adjustment would cost "more than €1 billion" and therefore burden the state budget for years to come.
Targeted tax credits
Backes reaffirmed that there is room for manoeuvre in the state budget worth €500 million. However, she wants to hold on to her initial proposal of using this margin on targeted tax credits.
Read also: Yuriko Backes proposes tax reliefs worth €500 million
The Finance Minister explained that the concrete measures are still being worked out at present. Although the sum of €500 million is "not set in stone", she intends on proposing "something fun" for people.
Reinforcing the housing market
Aside from implementing tax credits, new measures might be introduced for the housing market, said Minister Backes. When asked about the proposal of Greens MP Josée Lorsché to support people who are struggling to cover their variable-interest loans with tax credits, Minister Backes noted that the idea is still being discussed.
She argued that the offer on the housing market must be reinforced, but ruled out the idea of reestablishing accelerated depreciation, as proposed by the Christian Social People's Party (CSV).
Supporting businesses and households
Minister Backes defended her political record of the past few months. She stated that the measures from the last tripartite agreement prevented a loss of purchasing power, notably through the socially staggered energy tax credit. This measure will expire in April this year after the postponed wage indexation from 2022 will be made.
The DP politician concluded by saying that the government is not benefitting from inflation since it was decided to invest its revenue into support measures for businesses and households, a policy she intends to maintain.
