In a round table discussion hosted by RTL Radio on Saturday, six candidates running in southern Luxembourg delved into the intricacies of tax policy, shedding light on the disparities that have emerged within and between political parties in the run-up to the legislative elections.
Divergences on tax policy have become a prominent feature of the election campaign, with distinctions emerging among the Democratic Party (DP), the Luxembourg Socialist Workers' Party (LSAP), the Green Party (déi Gréng), and the Christian Social People's Party (CSV).
One notable point of contention is the taxation of large fortunes, where the DP stands in contrast to its coalition partners, the LSAP and the Green Party. The DP aligns itself with the CSV in opposing the taxation of substantial wealth.
Gilles Roth of the CSV voiced concerns that a wealth tax would prove "unfair," as some affluent individuals would dutifully pay their taxes while others with substantial wealth would exploit legal structures to circumvent their obligations.
Carole Thoma of the Left Party (déi Lénk) and Ali Ruckert of the Luxembourg Communist Party (KPL) shared the views of the LSAP and the Green Party, advocating for a comprehensive adjustment of the tax scale to account for inflation. In their perspective, this adjustment would reuqire heavier taxation of fortunes and a re-elevation of the top tax rate.
In contrast, the CSV seeks to reduce taxes across the board, with a proposed new tax bracket set at a 43% top tax rate for those earning over €500,000 gross per year.
However, this CSV proposal faced criticism from the governing parties. Max Hahn of the DP argued that it would only generate €15 million annually, while Taina Bofferding of the LSAP drew parallels between the proposal and the economic failures of former UK Prime Minister Liz Truss. Roth disagreed with these criticisms.
Both the LSAP and the Green Party are advocating for more targeted relief measures for the general population. The Green Party, represented on Saturday by Meris Šehović, has called for adjustments benefiting individuals earning up to three times the minimum wage, while Bofferding proposed a threshold of €12,000 gross per month.
Importantly, she made this proposal not in the context of a general adjustment of the tax brackets, but in the context of a comprehensive tax reform, seeking to eliminate the existing three tax brackets in favour of a single bracket — a reform that has been on the agenda for five years.
The DP shares a similar vision of tax reform, but envisions implementing it incrementally. Hahn also emphasised the necessity of gradual inflation-based adjustments to the tax table. However, he refrained from committing to universal relief, pointing to the €5 billion allocated to support individuals and businesses during the pandemic and the ongoing challenges posed by inflation.
When it comes to real estate added value, the CSV and the LSAP share a common stance. They propose extending the requirement for the seller to have themselves lived in the home they are selling to five years, up from the current two years, to qualify for the reduced rate of 20.5%.
Notably, the LSAP goes a step further, advocating for tax-free added value for one's primary residence. In contrast, the Green Party prioritises different aspects of housing policy, emphasising the taxation of vacant properties and land.
In addition, they draw attention to the appreciation of land value when it falls within the building perimeter, calling for necessary action in this regard.
Agreements amid general division
In summary, the DP and the CSV oppose tax hikes, with the DP intending to provide relief in line with available fiscal flexibility, while the CSV aims to reduce taxes for gross salaries up to €500,000 per year. The LSAP and the Green Party propose targeted relief for the population up to a specified threshold, coupled with wealth taxation, which neither the CSV nor the DP want.
Meanwhile, the Left Party and the Communists advocate for an automatic adjustment of the tax scale and increased taxes on high earners and wealth.
Other topics discussed on Saturday included economic development and mobility. All parties agreed on the necessity of increased investment in public transportation. While they acknowledge the importance of not vilifying cars, there is a collective commitment to making alternative transportation options more appealing.
In terms of economic development, the major parties agree on the importance of selectivity and a focus on fostering innovation in sustainability-oriented businesses. The Left Party and the Communists dismiss concerns that bolstering social rights for workers would lead to companies relocating elsewhere, labelling such fears as a "spectre."