In his recent State of the Nation address, Prime Minister Luc Frieden proposed redirecting Luxembourg’s CO2 tax revenue to help finance the national pension system.
Blanche Weber, president of the Ecological Movement, argues that CO2 tax funds should exclusively support emissions-reduction initiatives and include financial compensation for lower-income households. “Energy price hikes disproportionately affect modest incomes”, Weber told the press, concluding: “We will leave those with less money to fend for themselves, and we will do less to promote alternatives. It’s nonsense.”
Minister of Finance Gilles Roth confirmed to RTL that the carbon tax currently generates approximately €250 million annually. “We will have to see what portion could be allocated to pensions – and, obviously, this money will then be lacking for other social programmes”, Roth stated, noting any reallocation would require legislative changes. Minister of Social Security Martine Deprez is expected to develop concrete proposals.
Regarding Luxembourg’s additional €400 million defence expenditure (totalling €1.2 billion through 2025), Roth guaranteed no reductions to social budgets: “There will be no tampering with social spending to fund defence.”
