Fondation Idea's Muriel Bouchet said: “Taxes are not a dead loss for citizens, quite the contrary, as our overview of public expenditure shows.”
Photo: Fondation Idea
Luxembourg think tank the Idea Foundation held its annual press conference on 11 April 2018 where its gave its view on how Luxembourg stands economically and what issues it needs to address for the future. A third section of the conference was given over to discussion of the state of public finances, where Muriel Bouchet looked at what we pay and for what?
“Many people in Luxembourg complain that government is suffocating us, the tax burden is excessive and public spending is too low or too high,” said Bouchet. However, he believes that this mind-set lacks an overall vision and that it was for this reason that the Idea Foundation decided to take stock and conduct, “[…] a dispassionate analysis, of public revenue and expenditure in Luxembourg.”
Bouchet argued that the mentality that people only work to pay taxes is false, saying that, “Taxes are not a dead loss for citizens, quite the contrary, as our overview of public expenditure shows.”
“Public expenditure per inhabitant in Luxembourg is almost double that of other countries,” said Bouchet. “On average €30,000 of public funds is spent on each inhabitant every year.”
Although this figure may seem high by international comparison, Bouchet argued that it could also mean, “well defined political priorities or perfectly objective economic factors.”
According to the Idea Foundation review, in 2016 the breakdown of receipts received by the Luxembourg state was: 28.6% from social contributions, 22.8% income tax, 17% from VAT, 12.2% from direct taxes on companies, 4.5% from subscription tax and 9.1% other taxes like excises. The total receipts collected represented 38% of GDP for the year.
Of these receipts, in the region of 51% (the equivalent of €30,000 per person for the year) went back to Luxembourg residents. For the same period, Germany spent +/- €15,000 per person; Belgium +/- €18,000; France +/- €17,000 and the Netherlands +/- €16,000.