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Luxembourg's 2013 Budget Submitted To Lawmakers

by Ulrika Lomas,, Brussels

08 October 2012

Luxembourg’s Finance Minister Luc Frieden has recently presented to the country’s chamber of deputies the government’s 2013 budget bill, providing for a number of significant tax measures.

Frieden unveiled details of a range of initiatives designed to finance the deficit, which are in addition to measures already presented back in May.

Among the key fiscal measures contained in the 2013 budget bill include plans to increase excise duties on both tobacco and diesel, and to cap the deduction for consumer credit.

It would also appear that the government intends to expand the scope of the minimum tax on companies. Currently, this applies to holding and financial companies at a flat rate of EUR1,500, but the draft budget suggests that this could be expanded to include all firms at levels between EUR500 and EUR10,000, depending on revenues. The draft budget does not provide further details, however.

The government also plans to lower state operating costs, to increase the prices of bus and train tickets and to reduce assistance for re-employment.

The 2013 budget is based on forecast revenues of EUR12.9bn, up 2.6% compared with the 2012 budget. The estimated tax take on wages and salaries has been set at EUR2.5bn (+8%) and value-added tax (VAT) at EUR2.6bn (+7%).

Spending is expected to reach EUR14.2bn (+3.5% compared with last year’s budget).

Spending on investment is to be maintained at a high level, namely EUR1.7bn or 3.8% of gross domestic product (GDP).

During the course of his speech, Frieden explained that the government’s 2013 budget bill had been drawn up within “a very difficult” economic context, both at national and at European level.

The minister explained that a year ago, the government had predicted growth of 2% of GDP for 2012, noting that in contrast, according to the latest forecast from Statec, the national economy is not due to grow or to grow very little this year.

For 2013, the government is forecasting growth of 1.7% in Luxembourg, compared with predicted growth of just 1% for the eurozone.

TAGS: Finance | tax | investment | business | gross domestic product (GDP) | budget | corporation tax | Luxembourg | excise duty | small and medium-sized enterprises (SME)

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