Government working on lower taxes, says Finance Minister
(CS) Finance Minister Pierre Gramegna said that an upcoming tax reform should result in lower contributions for businesses and individuals, while also discussing the budget, LuxLeaks and immigration at the presentation of the Luxembourg Business Compass on Monday.
Gramegna commented that he was happy but not surprised by the positive results of the Business Compass, which has seen Luxembourg business leaders increasingly optimistic about the economy.
The bi-annual survey commissioned by the Luxemburger Wort and KPMG polls business leaders in Luxembourg about their outlook on the economy.
Low inflation, low oil prices and good projections for 2015 had boosted confidence among companies, he said, resulting in more positive expectations.
The minister added that the Luxembourg government had succeeded in fixing the budget, with a balanced budget on the horizon for 2018/19, adding to a more positive environment.
Gramegna also addressed the upcoming tax reform, saying that taxes in Luxembourg should be simplified, with a clear goal in mind - lowering taxes for both companies and individuals, while ultimately making the same revenue. A better tax regime would be able to attract more business, the Finance Minister commented, generating new sources of tax income, resulting in a budget neutral reform.
He also commented that new regulations needed to be put in place for new sectors of the economy, such as digital technology or FinTech, which do not produce tangible goods.
However, Gramegna did not reveal any numbers, saying that lots of variables were at work, with assessments and models to be made before a bill can be drawn up.
Speaking about taxes, the minister also said that Luxembourg was working on improving its image, which suffered in light of the LuxLeaks scandal, that saw the Grand Duchy scrutinised for the extent of its tax rulings practice.
On Monday, MEPs of a tax rulings commission visited Luxembourg to meet with representatives of PwC, Luxembourg for Finance and Luxembourg for Business, Amazon and NGOs, but also MPs and the Finance Minister.
The latter said that he was able to show that Luxembourg has changed and is changing, having become a key player in global efforts to tackle the issue of tax rulings, such as the OECD’s Base Erosion and Profit Shifting (BEPS) talks and a supporter of an automatic exchange of tax rulings programme at EU level.
The minister said that the EU presidency would be a good time to show Luxembourg’s commitment to the issue, while also commenting that the focus needed to be shifted from the Grand Duchy to the international scope of tax rulings schemes.
“Luxembourg is not the problem, but part of the solution,” Gramegna commented.
Competitiveness and talent
To keep Luxembourg abreast of the changing environment and to help diversify its economy, the Finance Minister also touched on the importance of the digital sector, with Luxembourg having made a name for itself as a data centre and working on boosting FinTech, ICT and other areas.
A key result of the Luxembourg Business Compass survey, which has been repeated over the years, is the difficulty to find highly-skilled workers for the jobs.
Gramegna commented that efforts were underway to facilitate recruitment. For example, he said that the government had agreed to lower the minimum salary to secure a work permit in the IT sector for foreign nationals, saying that this needed to be extended to other professions.
Some 10,000 people come to Luxembourg from abroad every year, the minister said, proposing that targeted efforts should be made in one or two countries, or with universities abroad, to help attract the right kind of people for the jobs available.
A more innovative approach was needed to achieve the goals, he commented,
However, the government is not only keen on bringing in talent from the outside, Gramegna pointed out, with Education Minister Claude Meisch set to present the new “Digital for Education” this week at the ICT Spring conference, which will aim at teaching Luxembourg students the right skills to be successful in the local labour market.
For more information on the Luxembourg Business Compass click here.