Was this a deliberate intention or simply a calculation too complicated to estimate, given that the budget is above all a sum of hypotheses and not an exact science, as the CSV MP , rapporteur for the first budget presented by the Frieden government, pointed out in March 2024? MPs will decide whether the government is acting in good faith.

One example of the difficulty of estimating the budgetary impact of a particular provision is the budget's flagship measure, which has not yet been quantified: the fight against non-use of social assistance, more specifically rent subsidies and cost-of-living allowances. The take-up rate for these two benefits is said to be "very high": 80% for the rent subsidy and 40% for the cost-of-living allowance. Questioned on this subject, the prime minister's office replied: "With regard to the aids mentioned, the relevant ministries have not carried out simulations in order to quantify the exact impact if all eligible recipients were to apply, given the technical difficulties involved in accurately estimating non-take-up". With regard to one specific point in the fight against non-take-up - making the cost-of-living benefit (AVC) and the energy allowance automatic only for people receiving an allowance under the social inclusion income scheme (Revis) - the government estimates the bill at €6.2m. “The figures in the draft budget are based on the assumption that a large number of people will apply for the aid in question, based on experience in previous years.”

The unquantified qualitative measures mentioned in the opinions concern many areas, but more particularly the civil service, administrative simplification and social policy.

Notable omissions

Among the notable omissions of figures for certain government measures noted in the various opinions on the budget, we find the following provisions:

- the reduction in the tax base for property registration and transfer duties. The Chamber of Commerce applauded this measure aimed at revitalising the property market, but is surprised at the lack of an assessment of its financial impact. The Minister of Finance mentioned €100m, a figure that was subsequently qualified, without detailed projections according to different scenarios, according to the Chamber of Commerce.

- More generally, the Court of Auditors (Cour des Comptes), examining the measures to stimulate the housing market, pointed out that the budgetary impact of these measures has not been quantified and called on the government to provide an assessment.

- The Court of Auditors criticised the lack of an updated plan to combat smoking, pointing out the one-dimensional nature of the increase in excise duty on tobacco, with no measurable objectives.

- Also in the area of healthcare, the Chamber of Employees (CSL) is concerned about the impact of the reduction in public insurance coverage amounts for medical laboratory tests on the financial viability of laboratories and on the quality of healthcare.

- For its part, the Court of Auditors criticised the failure to calculate the costs of the "Solidaritéitspak 2.0" and "3.0". It is calling on the government to provide a comprehensive quantified assessment.

- Syvicol is calling for the annual publication of the components of the flat-rate allocation of the Fonds de dotation globale des communes (FDGC), which finances local councils.

Lack of transparency on expenditures...

The Luxembourg Central Bank (BCL) was particularly concerned about the lack of access to detailed data on public spending, "beyond that presented in the budget documentation". This restricted access prevents it from "carrying out an in-depth analysis of expenditure and formulating appropriate recommendations". This is particularly true of salary expenditure. Expenditure which, the BCL found, had been systematically underestimated in the draft budgets of recent years. “This lack of budgetary accuracy makes it difficult to assess the long-term sustainability of public finances.” It added: "Despite a significant increase in projected remuneration expenditure for 2024, the information provided does not make it possible to understand the factors underlying this increase". And given the lack of transparency on measures to curb spending, the BCL questions the government's real desire to curb the spending dynamic.

For the Chamber of Trades, it is the lack of detail on public investments that is regrettable, "which makes it difficult to assess their relevance and their contribution to economic development and to solving the country's structural challenges".

The Court of Auditor's attention focused on special funds. It deplores the absence of "essential" information on projects financed by special funds, such as legal authorisations, overall authorised costs, payments made and planned, and points to the lack of a breakdown of expenditure for certain funds, such as the Global Endowment Fund for Communes, making it impossible to analyse the distribution of funds between the various communes.

The National Council for Public Finances (CNFP) recommended that the government explain in a transparent manner the reasons why the maximum amounts for central government expenditure are exceeded.

... and revenues

The BCL and the Chamber of Commerce pointed out in their opinions the volatility and concentration of corporate income tax mainly in the financial sector and the impact that any structural change affecting these companies could have on government revenue. In the context of the minimum taxation of multinationals (pillar 2), the return on this tax is becoming difficult to predict. The BCL is encouraging the finance minister to provide further details on this subject, "given its importance for the assessment of public finances". It also criticised the lack of consistency between the subscription tax revenue projections and the underlying macroeconomic assumptions, and pointed the finger at the large and surprising revisions to VAT revenue over a long period. Finally, the BCL recommended regular publication of the breakdown of revenue from state holdings in the draft budget, to improve transparency.

The Court of Audit pointed out that GDP estimates are often revised as additional data is collected. It encourages regular and transparent revisions of budget forecasts to reflect the country's economic reality as closely as possible.

Read the original French-language version of this news report /