Muriel Bouchet, Michel-Edouard Ruben and Vincent Hein spoke of a “deteriorated outlook and a high level of uncertainty.” (Photo: Romain Gamba/Maison Moderne/Archives)

Muriel Bouchet, Michel-Edouard Ruben and Vincent Hein spoke of a “deteriorated outlook and a high level of uncertainty.” (Photo: Romain Gamba/Maison Moderne/Archives)

In an opinion on the state’s economic situation and budgetary forecasts, the Idea Foundation has proposed amendments on purchasing power, competitiveness, housing and energy, to deal with what it calls “a tragedy of horizon.”

The , the economic think tank of the Chamber of Commerce, has issued its opinion on the and the state’s public finances. The opinion describes the budget situation as “a complex exercise constrained by a tragedy of horizons, a deteriorating outlook and a high degree of uncertainty.” So far, it is in line with the six other opinions already issued. It welcomes the exceptional and “indispensable” support measures taken by the government in favour of household purchasing power, while stressing that Luxembourg has thereby adopted “a posture of energy socialism,” in the same way as other European countries.

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In addition, the foundation says that Luxembourg is “practically in a situation of full employment,” that the number of company bankruptcies is falling and that the household savings accumulated during the covid period have not yet been fully absorbed by the energy crisis. But it is the “economic sentiment of households and businesses” that is “depressed,” according to the foundation. It reckons that sustainable inflation and the indexation system would constitute “a major challenge capable of precipitating a revival of grand ducal neo-corporatism.”

Corollary proposals

The Idea Foundation proposes a revaluation of the maximum value of meal vouchers, which has been fixed between €3.60 and €10.80 since 2017. It would like their value to increase in line with the rise in food prices to a range of between €5 and €15.

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On corporate tax, which the foundation says has been “frozen for 20 years,” it proposes to increase the local business tax allowance from 16% to 55%, i.e., €20,200 for local authorities and €46,200 for partnerships and sole traders.

In terms of housing, Idea proposes to reintroduce the principle of capital gains transfer and to lower registration fees. But above all, it wants to introduce a housing allowance to support low-income homeowners, who would be in debt because of variable interest rates, for example.

Finally, on energy subsidies, the foundation calls for a mid-term review in the run-up to the winter of 2023-2024, which is included in the budget, in order to limit state spending to the economic reality of the moment, which is unpredictable today.

This article was first published in and has been translated by Delano.