Tax justice will suffer a "slight hiccup" as a result of the planned reform, former head of the tax administration Guy Heintz told RTL Radio on Thursday morning. Heintz said he believed that supporters and opponents of the reforms have equal arguments, and that when it comes to taxes, it often depends on how you spin things.
Finance Minister Gilles Roth's reforms are entering the final stage and will likely be passed by the CSV-DP majority at the end of October, with a view to coming into force from 1 January 2028.
Heintz described the individualisation as "progress" and "simplification", but warned that replacing the current three tax brackets with a single one might not benefit all situations.
The government, meanwhile, has focused messaging on the increase in child benefit, the reform of childcare vouchers, and the planned taxreduction for parents with children up to three years old. Heintz said this repetition gave the impression that everyone is in the same situation, but that the issue would be vastly different for single parents, childless couples, or widows and widowers.
A transition phase of 25 years is planned for people who get married or enter into a civil partnership before the reform comes into force in 2028. Heintz said it was regrettable that the Council of State's suggestion to link the transition to the duration of the marriage was not retained.
He also noted that the bill lacks a provision that, if a couple's situation changes, one partner could only "minimally deduct" the difference from the lower-earning partner's wages. He wondered whether an administrative circular could ensure that this could be recognised as an "extraordinary charge".
"It's important to communicate", Heintz said, noting that people often ask him personally what kind of tax would be better for them. Everyone should be able to simulate it, he noted, as it is not possible to return to class 2 after the switch.
The system with the first and second tax cards and the advances would disappear, so those with the first tax card would automatically have lower net earnings.
Comparing various situations in the new "U" scale with the current scale, it turns out that people in tax bracket 1 in particular and couples in bracket 2, where both partners have an income, will have the most tax relief. The former head of the tax administration pointed out, however, that the extra-professional allowance of €4,500 is being eliminated.
Regarding tax class 1A, Heintz shared the opposition's argument that they would benefit the least from the reforms. But he also shared the government's argument that single-parent families would already have experienced a good deal of tax relief by 2025.
However, he also noted that after the reform, both situations would be treated equally in terms of tax, even though single-parent families would also receive a tax credit.
Expressed in percentage terms, the lower incomes will benefit the most from the reform. Expressed in euros, however, there is relief even for the highest incomes.
Heintz smiled a little as he remembered the years when he entered the workplace in the 1970s. The top tax rate of 57%, with a solidarity tax of 10% on top of that, would today be considered "confiscatory".
Nowadays, the top tax rate is 42% for incomes over €235,000 and the increase due to the solidarity tax is 7%, and 9% for high incomes.
The CSV-DP government say everyone should have "more net than gross". The costs for the State – around €1 billion per year – remain a question of politics.
But Heintz warned that today's tax relief does not equate to tomorrow's austerity measures or taxes, citing the crisis tax of 2011 as an example.
