Tax reform 2017 : press release
TAX REFORM: A GENERALLY ENCOURAGING REFORM, BUT STILL VAGUE AND FAR FROM BEING COMPLETE
ALEBA has examined the tax reform presented on 29 February by the Bettel government. While these changes are generally positive, it is clear to ALEBA that the reform is insufficiently precise, but equally, the government has avoided taking any great risks.
Some positive measures
ALEBA welcomes the measures that will benefit households and families, such as a more equal tax scale, tax credits adapted to income, the increase of the tax-free limit for housing savings plans and private pension plans, as well as reductions of interest rates linked to housing loans. Households on low to medium income will be particularly affected and that can only have a positive impact on their spending power. The confirmation of the abolition of the 0.5% budget balance tax is also clearly good news.
Some measures are still vague
The introduction of individual taxation for married couples is another welcome move, but ALEBA thinks there is still a lack of precision. It allows monthly taxes to be adjusted to match the real situation of each taxpayer, and, in particular, it avoids the payment of quarterly advances. However, substantial questions persist as to practical measures, such as understanding on which tax declaration will children, costs and tax-breaks will be taken into account.
Some measures far from being finished!
For ALEBA it is indispensable that tax contributions be made on the basis of equality. ALEBA regrets that the government did not go further on providing tax advantages for low income single parent families. Also, it could have gone with the grain of changes in society by having an automatic application of tax class 2 for couples in a civil partnership, as is the case for married couples! Similarly, it is a pity that a lack of political courage meant there were no thoughts to abolish, once and for all, the different tax classes to create just one. For ALEBA, greater effort could have been asked of large businesses, not least because the dividend payment season is about to begin.
Of course, ALEBA hasn’t forgotten that these changes also follow much less pleasant moves made by this government. This includes the increase in VAT and the repeated delay of salary indexation, not forgetting the temporary budget balance tax!
It was also regrettable that despite being the premier financial sector union, the Luxembourg economy’s key sector, ALEBA was, once again, neither consulted about nor associated with this reform.
(Luxembourg, 2nd March 2016)
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Head of Communications and Strategy
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