The Greens will not vote in favour of the tax reform, the party declared at a press conference on Friday. Finance Minister Gilles Roth's proposals would be too expensive and lacked solidarity, they said, explaining they would prefer individualisation or a single tax scale.
The CSV-DP government would be willing to spend a billion euros just to fulfill an election promise, but the majority of the reform costs would come as relief only for the ninth highest category of earners, Greens MP Sam Tanson said, citing the Chamber of Employers' report on the reforms.
When asked about the fact that Roth's "U" scale, expressed in euros, would effectively relieve higher incomes, but expressed in percentages, those with smaller incomes would have more, Tanson replied briefly and concisely: "You can't buy anything in the supermarket with percentages."
The Greens expressed a preference for individualisation, but recognised this could cause issues for partnerships, calling into question the responsibility of one partner for the other, as established in civil law. The "petite enfance" or early childhood allowance for people with children up to 3 years old, which the government is proposing, would not compensate sufficiently, say the Greens, and would only relieve those people who already have a tax burden.
They are therefore demanding that the planned deduction be replaced by a tax credit for children up to the age of 18. A tax credit should also be given for other services provided to family members, the co-chair of the Greens, François Benoy, explained.
Instead of creating structural holes in the state finances with an election promise, there should be targeted relief, according to the Greens. In particular, tax class 1A, i.e. single parents, as well as others. To co-finance the reform, the Greens are calling for two new tranches of 43 and 44% – currently the top tax rate is 42%.
With the 2017 reform, the former government coalition introduced two new tranches of 41 and 42%.
In addition, they are calling for more "ambition" in the property tax reform and the mobilisation tax, but also the introduction of a wealth tax for people with high incomes and the abolition of half the taxation of dividends and the tax exemption for share sales after 6 months.
The Greens are not calling for an inheritance tax or an increase in the solidarity tax.
The party said they do not believe that a stronger taxation of capital gains would harm the business model of the Luxembourg economy. It would be a question of justice and peaceful coexistence that everyone contributes, including "those who have organised themselves well and therefore have contributed less in the past", as Tanson described.
The Greens are also against the reduction in corporate tax that the CSV and the DP have decided on for next year. Although the Greens themselves supported this while in the previous government, Luxembourg City councillor Fabricio Costa excused this as a "compromise" the party had to make at the time. Nowadays, they would rather support companies in a targeted manner.
