The debate on the current income tax regime was called after a petition on the matter garnered over 6,800 signatures earlier in the year.

Pierre Gramegna (DP) had mentioned the need for a “progressive generalisation” of a more neutral fiscal model when he responded to a parliamentary question back in May. At the time he wrote that any reform should not discourage one person in a couple from working.

On Monday, Gramegna did not issue a timeline for the reform but said that work was ongoing and that he was in the process of discussing with stakeholders. In May, he had said it was a coalition government priority and he expected the new regime to enter into force before the end of the current government's term in 2023.

The current income tax system in Luxembourg uses two classes:

1: For single people;

1a: For single people who have children or are aged over 65;

2: For people who are married or in a civil partnership.

Depending on earnings, the consequences of this system can penalise single people, as outlined by petition 1188.

KPMG provides this explainer on the average tax rates according to taxable income and tax class.