In an interim review of public finances, Luxembourg was already running a deficit of €278 million as of March.
During a joint meeting of the parliamentary Finance and Budget Execution committees on Tuesday morning, Finance Minister Gilles Roth provided an update on the current state of public finances. By the end of the session, however, it appeared that MPs had not all attended the same meeting, as differing interpretations emerged.
Parts of the opposition expressed concern that the financial situation is less healthy than hoped. MP Franz Fayot of the Luxembourg Socialist Workers’ Party (LSAP) noted the €278 million deficit, adding that “this is just over a single quarter”. He warned that projecting this trend would result in a negative scissors effect of over one billion euros. In his view, the shortfall is largely due to corporate tax receipts falling short of the previous year’s levels.
MP Diane Adehm of the Christian Social People’s Party (CSV) offered a more measured perspective, noting that several revenue streams are below forecast, but that this is “normal”. She said Minister Roth had explained during the morning session that certain “very large taxpayers” can cause revenues to spike considerably on the days they settle their taxes.
The opposition also criticised not only relatively low revenues but also persistently high expenditure, citing the civil service and defence as examples. Adehm responded that the state has binding obligations in both areas: commitments to NATO on defence, and the civil service wage agreement, which must be honoured.
Beyond these two issues, the opposition sees room for savings. MP Sam Tanson of The Greens (Déi Gréng) questioned the planned tax reform, calling it “a reform that will burden the budget by an additional billion euros a year”. She added, “We really must ask ourselves whether, at this stage, it is appropriate to implement it, given the current financial situation.”
Finance Minister Gilles Roth, however, is pressing ahead with the reform. He explained it is scheduled for 2028, and he assumes that by then one or two wage indexations will have been triggered and comprehensively adjusted within the tax brackets.
Roth argued the reform would also help boost public purchasing power. High fuel prices, he added, have only a limited impact on the state budget: VAT receipts rose by €8 to €12 million over the first three months of the year.
