Key takeaways from the 2019 budget:
- A 6.8% increase for the housing ministry. Subsidies for social rental housing and low-cost housing would increase 17% and the budget for the low-cost housing body SNHBM would rise by 40%.
- More than €2.5 billion earmarked for national education, children and youth. These investments will be used to finance measures such as parental leave (+€237 million compared to 2018), the childcare service voucher scheme (+€421 million compared to 2018) and psychosocial support for pupils with special needs (+18% compared to 2018). With regard to higher education, the finance minister said a further 6.5% is earmarked for scholarships. The financial contribution by the Luxembourg State to the University of Luxembourg and the various research centres will increase by €352 million compared to 2018.
- The local authority income tax (IRC) will be reduced from 18% to 17% while the revenue threshold for which the minimal 15% IRC rate will be charged has been increased from €25,000 to €175,000. Finance minister Pierre Gramegna said this measure would help young startups and SMEs.
- The Centre for State IT (CTIE) will have its budget increased by 17% in a bid to boost digital competitiveness.
- The super-reduced 3% VAT rate will be applied to women’s hygiene products, such as sanitary towels and tampons, and all digital publications, including ebooks, and other online publications.
- The excise on petrol will increase by a symbolic 1 cent per litre, and 2 cents per litre on diesel.
- Investment in the environment and climate will be increased from €455m in 2018 to €710m in 2022. Globally, these investments make up a fifth of the total 2019 budget.
Expenditure and revenues
- The government announced the central administration’s expenditure reached €19.6b, 48% of which is dedicated to social benefits and subsidies.
- Revenues amounted to €18.9 billion, of which 47% came from direct taxes and 38% from indirect taxes.
- The central administration has a negative balance sheet of €650 million. According to minister Gramegna, this will gradually decrease in order to get closer to balance in 2022.