Luxembourg’s Finance Minister Luc Frieden has presented the government’s State budget for income and expenditure for 2010 to the Chamber of Deputies.
Referring to the 2010 budget as an “anti-crisis” budget, designed to support the economy and to protect jobs, the Minister categorically ruled out any increases or reductions in taxes for companies or individuals for next year, adamant that there is currently no scope to implement tax cuts, and that any rise in taxes would merely prove damaging to the economy.
According to the 2010 budget, the public administration deficit is set to reach EUR1.6bn in 2010 (4.4% of GDP), the central government deficit is due to reach EUR2.2bn (6.2% of GDP), and the local government deficit thought to rise to around EUR67.9m, while the country’s social security surplus is estimated at around EUR742m.
Regarding the main sources of budgetary income for this year, income tax from local authorities has declined by 15.5% between 2009 and 2010, the tax on the net value added by a company has dwindled by 14.3%, and the subscription tax levied on company securities has fallen by 15.4%. The tax withheld on wages and salaries has, however, increased by 5.1%, as compared to the last year’s budget.
Finance Minister Luc Frieden has revealed that the government intends to maintain spending on public investment at a high level, although plans to cap expenditure for subsequent years at the level fixed for 2010. Funding for businesses is set to increase by 13% next year, and for Research and Development, investment will rise from EUR203m to EUR210m.
Commenting on the budget, Luc Frieden emphasized the exceptional economic context in which the budget had been drawn up, adding that the prevailing global economic crisis has had a profound impact on the country’s economy and budget. Although confirming that the situation is slowly improving, the Minister nevertheless remained cautious. Determined to address the issue of the country’s budget deficit, the Minister stressed that a budgetary deficit is only acceptable in times of crisis.
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