This being the last budget before the parliamentary elections, finance minister Pierre Gramegna has told Paperjam that “continuity” would characterise this project. There will be some new proposals, such as partially free child care, and possibly new measures on housing. The finance minister also mentioned that credits or tax allowances to support start-ups might feature in the budget proposal.
Gramegna will present his budget to parliament in October and, after discussion in the parliamentary committee, the final vote should follow in December. Joëlle Elvinger (DP) will be rapporteur on the budget.
Paperjam argues that the room for manoeuvre is limited, as the current budget already contained several major fiscal reforms and high investments in infrastructure. These reforms will have a negative impact on the public accounts next year, considering the lowering of the corporate tax rate from 19% to 18% in 2018 and paternity leave. The deficit of the central administration will increase from €215 million in 2016 to €1 billion in 2017.
The finance minister nevertheless reassures that public finances on the whole (central administration plus local finances and social security) will fulfil the European criteria. While debt will increase by 2021, its proportion relative to GDP is projected to stay below the 30%-mark set by the stability and growth pact.
The opposition party CSV, which is likely to be essential for a new government coalition in 2018, criticises the fact that despite high economic growth, the accounts of the central administration will be in deficit. They will be joined by the ADR, while Déi Lénk argue that the budget plays to the markets and ignores citizens’ interests.