POLITICS & INSTITUTIONS - ECONOMY

Gramegna: Tax reform laid on ice



Pierre Gramegna says that although “inequalities in the tax system have been plaguing us for 30, 40, 50 years”, fiscal reform will have to wait. Mike Zenari

Pierre Gramegna says that although “inequalities in the tax system have been plaguing us for 30, 40, 50 years”, fiscal reform will have to wait. Mike Zenari

Finance minister Pierre Gramegna (DP) has ruled out introducing changes to the tax system before the next elections in 2023.

With no definitive end of the coronavirus pandemic in sight until the autumn, the government has put on ice any plans it had for what finance minister Pierre Gramegna had called “a structural tax reform”. Speaking (in Luxembourgish) on RTL radio’s Background am Gespréich show on Saturday, Gramegna said that even though Luxembourg has come through the crisis better than initially feared, as finance minister he had to be “reasonably cautious”.

That will come as a blow to those who have been calling for more individual income tax equality, especially single parents who lose their married tax status three years after divorce. “Inequalities in the tax system have been plaguing us for 30, 40, 50 years,” Gramegna said. He added that the latest tax reform in 2017 had brought about some improvements, and that the government had also worked to introduce the re-indexation of family allowances, which was just announced last week.

He also seemed to dismiss suggestions from coalition partner the LSAP, and in particular labour minister Dan Kersch, to introduce some sort of special capital gains tax on companies that have profited from the pandemic. Gramegna said he could understand the reasoning, but that deciding “on what sort of profit one pays X taxes” would be extremely difficult to determine. In any case, he explained, companies that made gains were already taxed, while those that had experienced losses paid nothing. Taxes were “not there to punish” but to be “fair”, he said.

And even if some progress is being made between the finance and interior ministries in drafting a land tax reform, which Gramegna says will place emphasis on preferential treatment for a main residence, the three coalition parties still have agreed on what rate would be imposed. The scene is set, then, for fiscal reform to be a central plank of the 2023 election manifestos.