Consumer group throws support behind tax reform for singles

ULC president Nico Hoffmann, pictured during a previous event, on 14 March presented the group’s election demands Library photo: Matic Zorman

ULC president Nico Hoffmann, pictured during a previous event, on 14 March presented the group’s election demands Library photo: Matic Zorman

Consumer protection group ULC on Tuesday said political parties should tackle tax reform in their upcoming election programmes, saying that singles--and single parents in particular--are being unfairly burdened.

With national elections scheduled for October, pressure groups in Luxembourg are starting to release their demands for the country’s political leaders to tackle, and the ULC is no exception.

“It’s established that the cost of living of a single-person household, or a single parent family, is not substantially lower than that of the households in tax bracket 2,” the ULC said in a document published on 14 March. “On the contrary, the biggest costs, such as those linked to housing, are paid by one person only instead of two.”

The ULC said the 1A tax bracket--for single parents--should be abolished and taxpayers should be grouped in category 2, as are married or registered couples with or without children.

Singles without children in tax bracket 1 should also see their burden relieved, the ULC said.

A petition calling for singles to pay less taxes that opened for signature on 25 February had reached 9,960 signatures at the time of publication, more than double the amount needed to be debated in parliament and with members of the government.

The government under prime minister Xavier Bettel (DP) following a similar petition in 2019 had promised a tax reform but shelved this initiative after the pandemic prompted massive government subsidy programmes, causing the state’s deficit and public debt to rise.

Purchasing power

A basic net salary calculator online shows that a gross wage of €5,000 per month results in a net salary of just under €3,600. For a person married without children, this rises to over €4,150. A single person with children receives €3,660. Luxembourg has one of the highest tax wedges between people living alone and couples.

A second petition calls for the 1A tax bracket to be abolished, as per the ULC’s demand, and had gathered 2,679 signatures at the time of writing, with another 25 days to go to collect more.

“The ULC is obviously conscious of the fact that first the covid-19 crisis and then the conflict in Ukraine and the measures already taken have affected the state’s budget,” the group said. “Nonetheless, purchasing power of households must be strengthened.”

The ULC also suggests adapting tax brackets to inflation, a move foreseen for next year under the tripartite agreement struck on 3 March, tax exemptions for employees on minimum wage and raising the caps on tax allowances and deductions for more people to be able to benefit.

Housing, transport, banking

Elsewhere, the ULC demands more measures to combat speculation in the real estate sector, more involvement by the state and communes to acquire land and create affordable housing, making subsidies more accessible, as well as a range of fiscal measures to deduct interest rates or pay less taxes when renting our properties at affordable prices.

The consumer protection group also repeated previous demands against steadily rising banking fees and charging for in-person services, which disadvantages the elderly and persons with disabilities who have less access to online banking.

The 22-page document also demands moves towards a more sustainable and circular economy, better public transport networks, and strengthening consumer protection laws.