The latest budget report published by the Court of Auditors warns that Luxembourg is not ready for another financial crisis.
The Court of Auditors went on to say that Luxembourg needs to rethink its tax policy and move away from dependence on tobacco and alcohol sales. It is not clear whether the revenues from tobacco taxes are sufficient to cover the costs of treating health issues related to tobacco consumption. In addition, this cannot be applied to fuel sales tax due to the energy transition.
As an alternative, the Court of Auditors proposes a sugar tax, which would benefit both health and the budget.
As for expenditure, the Court of Auditors expressed concern that the budget only provides for defence spending of 2% of the GDP, even though this rate is due to rise to 5% by 2035. Public finances are also not ready to effectively weather another crisis or address the challenges of climate change.
