POLITICS & INSTITUTIONS - ECONOMY

Employers united against Kersch’s ‘covid winners tax’



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Business leaders Michel Reckinger, Jean-Paul Olinger, Carlo Thelen (seen on left, upper row) and Romain Schmit, Nicolas Henckes and Tom Wirion (bottom row) have reacted negatively to Dan Kersch’s company tax proposal. Photomontage: Maison Moderne. Library pictures. 

Is taxing the companies that have benefited the most from the covid-19 crisis a good idea? This was proposed by the deputy prime minister and labour minister, Dan Kersch, during a LSAP party congress over the weekend. But it has hardly won unanimous support among employers.

“Who are the winners of the crisis? Companies?” asked Michel Reckinger, president of the Luxembourg business federation UEL. Reckinger said the ‘winners’ were mainly individuals who “did not go on vacation and saved a lot.” He also stressed the lack of precision on the amount of the proposed tax, and on the basis for designating a “winning” company. Its turnover? Its profitability? Its sector of activity?

“We can discuss everything,” he said. But it is difficult for him to debate such imprecise words, which he described as “outright populism,” adding: “This is an announcement, I don’t know if it’s worth dwelling on. A left-wing political party announcing a left-wing measure; it’s not surprising.”

Jean-Paul Olinger, director of the UEL, added: “We all want to accelerate the economic recovery.” Olinger said that this will mainly involve investment. He argued that money needs to go to three priority areas: “Digitisation, ecological transformation and skills.” He advocated for incentives, for both companies and individuals. 

Will this be enough? “This crisis is different from the others; it is not consumer confidence that is affected,” he said. He envisions a speedy recovery as soon as businesses are fully open again. In addition, he observed that the deputy prime minister’s remarks were made in a political context, with the 2023 legislative elections in view.

“Political show” 

“I think the time is not right to make this kind of proposal,” commented Tom Wirion, director general of the Chamber of Skilled Trades and Crafts (Chambre des Métiers). Likewise, he placed the proposal in a political context. “I could hardly imagine the government is thinking this way.” On the idea itself he said: “This is not the right approach to have if you want to come out with your head held high.” 

“Companies that made more profits in 2020 will pay more taxes anyway,” noted Romain Schmit, secretary general of the Federation of Craftsmen (Fédération des Artisans). Schmit classified the announcement as a “political show”. And expressed his doubts on the possibility of “making taxation a tool of reward or punishment.”

Vaccination to boost consumption 

At the Chamber of Commerce, “we agree on the need to get public finances in order", so that the crisis does not spill over to future generations, and on the importance of maintaining the country’s top-notch AAA credit rating. Regarding the means, “we completely disagree,” said Carlo Thelen, the chamber’s managing director. 

He also emphasised the open question of how a winning company would be designated. And take the example of those who sold more bikes during the crisis. “What they’ve sold now they won’t be selling a year from now.”

Regarding those who have produced masks or hydroalcoholic gel, he said that “these are companies that have been able to mobilise to offer the goods and services in demand.” Amazon, which has benefited from the boom in e-commerce, “pays taxes and employs a lot of people in Luxembourg.” To rebalance public finances, it would first be necessary to redirect “the savings accumulated by households in the economy.” And for this to happen as quickly as possible, “speed up the vaccination campaign.”

Nicolas Henckes, director of the Trade Confederation (Confédération luxembourgeoise du Commerce), wondered, moreover, how to distinguish a company that has benefited from a windfall effect from a company that has done well in 2020 without the covid effect. “For me, it’s a populist and demagogic idea,” he said. He similarly painted the measure as political.

Originally published in French by Paperjam and translated for Delano