Income tax in Luxembourg could drop to 10%. But how?
A petition proposing a 10% flat tax on all income, from salaries to bonuses and overtime, got published on Friday. It has been collecting votes since. The founder of the petition believes that such a measure would simplify the taxation system and make it more transparent, guaranteeing equal treatment for workers who can receive more fair rewards for their labour. In addition, it will enhance productivity, inspire and motivate workers.
Currently, the tax rate system depends on the salary. People who earn less than 12,438 euros a year do not pay tax at all, according to the website of the Ministry of Finance, and our detailed article on the tax system in Luxembourg.
The only tax segment so far subject to the 10% rate is those earning between €16,578 and €18,648 a year. Then the normal rate increases progressively, and for earnings above 220,788 euros per year, the tax is put at 42%.
If and when the petition gathers 4,500 signatures, a public discussion must be held on it in the presence of the author, ministers and MPs.
The petition founder has not yet commented on the reform of the entire economic system in the country, which is largely based on the extremely high contributions of wealthy citizens. There are fears that the petition, which will undoubtedly gather the necessary signatures quickly, will be cancelled in the first round of debates in Parliament.