Luxembourg's major tax reform will be adopted exclusively with the votes of the governing coalition: the Christian Social People's Party (CSV) and the Democratic Party (DP).
On Tuesday morning, members of the Chamber of Deputies' Finance Committee from CSV and DP approved the reform report. Lawmakers from the Luxembourg Socialist Workers' Party (LSAP) and the Pirate Party abstained, while the Alternative Democratic Reform Party (ADR) and déi Gréng (The Greens) voted against. Déi Lénk (The Left) told RTL they have not yet reached a final decision on their voting stance.
The reform, introduced by Finance Minister Gilles Roth, will overhaul Luxembourg's tax system by moving to individualised taxation. The three current tax classes will be replaced by a single "U" scale, modelled on the existing 1A class.
Single taxpayers will see the greatest relief, while lower income earners will benefit most in percentage terms. However, almost all taxpayers – including those with higher incomes – will gain something in absolute terms under the new system.
Married couples for whom one partner earns more than 75% of the household income, and who would lose out under the new "U" scale, will benefit from a 25-year transitional period. The reform is scheduled to take effect in 2028.
Critics have noted the reform's estimated annual cost of nearly €1 billion, as well as its focus on encouraging dual-income households where both partners are in employment.
The Chamber of Deputies is expected to vote on the tax reform in the week of 27 October.
