0.5% tax to be abolished in 2017

The 0.5 percent budget income tax introduced in Luxembourg on January 1, 2015, is to be abolished on January 1, 2017, it has been announced.

Speaking on RTL radio on Saturday, Luxembourg Economy Minister Etienne Schneider explained that budget reforms will replace the tax.

The change of heart comes as a result of a general improvement in the country's economic development, thanks to the government.

The minister did not say how much the reform would cost the state, however. He also refused to provide further details on the budget reforms planned.

Minister Schneider spoke of changes in the middle class tax bracket, saying that various ax brackets will be “ironed out”.

As for the introduction of a wealth tax, an idea which is widely supported by the left-most wing of the Socialist Party (LSAP), the Minister did not comment and he added that corporate tax would not be revised upwards.

During the summer, the minister said that the next indexation segment would arrive in pay packets in December this year. Luxembourg data analysts Statec, however, suggest the change will not be due until January 2017.

Speaking on Saturday, the minister retracted his earlier statement saying that he was not sure when the next indexation would be applied.

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