The budget deficit has reached 339 million euros

In the first nine months of this year, the total revenue of Luxembourg’s central government increased by 9.9 per cent compared with the same period last year. However, a parallel rise in expenditure of 8.9 per cent resulted in a budget deficit of €339 million, excluding social security funds and local authorities. The largest items of government expenditure were civil service salaries, totalling €5.7 billion (+7.3%), and transfers to the social security system amounting to €5.3 billion (+6.5%). In the revenue structure, income tax on wages, VAT and corporation tax played a key role.

Finance Minister Gilles Roth described the situation as positive, but called for caution in light of the challenging international situation. The minister emphasised that the authorities have no plans to implement austerity measures and are deliberately maintaining high levels of investment in infrastructure and social benefits. Nevertheless, the minister highlighted the need to optimise public spending, noting the importance of controlling operating costs, adopting a more measured approach to recruiting new staff in the public sector, and rigorously assessing the viability of new projects.

For their part, representatives of the opposition parties have drawn attention to the temporary nature of the high budget revenues. LSAP MP Franz Fayot and dei Greng representative Sam Tanson (Sam Tanson) noted that a significant proportion of the revenue is linked to high interest rates in the financial sector and an unexpected one-off windfall of 400 million euros from inheritance tax. The opposition expressed concerns about the government’s planned tax reform, warning that reducing the tax burden in the hope of stimulating the economy does not yield results, and called for the tax burden to be redistributed by raising rates on high incomes and capital gains.