“Not adjusting the tax table to inflation is in fact a tax increase in disguise,” according to Gilles Roth from the Christian Social People’s Party (CSV). The co-chair of the opposition party’s parliamentary group spoke to our colleagues from RTL Radio on Tuesday morning.
Reacting to comments made by Minister of Finance Yuriko Backes on Monday, Roth rejected her claim that adjusting the tax table to inflation is “not responsible.” In fact, he argued that “it would be irresponsible to reduce the purchasing power of taxpayers by raising taxes,” reiterating that not adjusting the tax table is equivalent to a tax increase. The CSV politician stressed that “households are faced with higher costs and need to be relieved.”
Roth claimed that adjusting the tax table to inflation would not cost over €1 billion, as mentioned by Backes, but €600 million. “If we have €500 million, we should be willing to raise the remaining €100 million,” the MP believes.
According to Roth, residents “pay too much tax,” pointing out that those with an annual income of €45,000 already have to pay the top tax rate of 40%. “If you make €5,000 gross and receive, say, a €100 raise, the state receives €40 of it,” he explained. In the MP’s view, that is too much, with Roth stressing that “going to work must be worth it.”
By not adjusting the wage indexations, employees “pre-financed what they will receive.” The co-chair of the CSV parliamentary group noted that “with each non-adjustment of the tax table, the state receives between €275 and €300 million more. This would correspond to €1.8 billion for six wage indexations.”
Measures such as the energy tax credits “are a temporary financial aid and a drop in the ocean.” Adjusting the tax table, on the other hand, “would be a long-term structural aid.” The CSV, Roth stressed, stands behind the social dialogue “and wage indexations are a part of this, which is why they should be paid.” However, companies need to be helped on an as-needed basis if they face difficulties because of too many wage indexations.
Under a scenario with five indexations, adjusting the tax table to inflation would cost €600 million per year. These five are the indexations that were triggered between January 2017 and April 2022. Including the most recent indexation from February 2023 would bring the total to six and increase the total cost to €720 million. If the indexation due in April is included, the total would rise to €840 million.
On the other hand, the adjustment proposed by the Chamber of Employees, which is the one the Minister was referring to during her interview on Monday, would cost around €1 billion a year.
