Finance Minister Gilles Roth presented a cautiously optimistic mid-year budget review, highlighting a 12% increase in state revenue and a 7% rise in spending, but faced skepticism from opposition parties regarding the sustainability and realism of the positive projections.

Finance Minister Gilles Roth on Monday presented budgetary insights of the first half of 2024 to the Chamber's financial commissions. He confirmed that state revenue increased 12% year-on-year while spending went up 7% in the same time period. The balance of the central government was €487 million at the end of July, Roth further revealed.

Revenue from business taxation was up 37%. Despite the adjustment of the tax scale to inflation, revenue from income taxes rose 10% while VAT tax revenue increased 9.6%. Taxes related to registration fees meanwhile recorded the greatest slump, down 23% due to the decrease in real estate transactions.

When it comes to spending, the government's expenditure for unemployment benefits rose 21%. Similarly, employee spending increased by close to 10% to reach €3.3 million.

Following his presentation, Minister Roth voiced "cautious optimism" given that revenue increased. He further expressed hopes that the end-of-year budget deficit will remain lower than that of 2023. However, he warned that the situation remains uncertain and that it is impossible to "know what will still happen in the world".

Opposition less optimistic

Commission members from opposition parties – including the Luxembourg Socialist Workers' Party (LSAP), the Greens (Déi Gréng), and the Pirate Party – welcomed the favourable projections, but showed more moderate optimism than the minister.

Pirate MP Sven Clement underlined that even if lower, a deficit remains a deficit. MPs Franz Fayot (LSAP) and Sam Tanson (Déi Gréng) meanwhile reiterated their position that the government coalition overstates the importance of growth, suggesting that new investments and spending should be counter financed through higher wealth taxes. Fayot further argued that the minister's positive forecast is partially due to the fact that aspirations were kept low, which made it easier to surpass the initially envisioned goal.