After the elections, it’s before the elections

While the communal elections are barely over, the last aldermenial coalitions are being formed and the new mayors are eagerly awaiting their assermentation, the parliamentary elections are approaching with great speed.

Political parties are currently nominating their candidates for the autumn elections and finalizing their election programs.

In this edition of Aktuell, the OGBL gives them a helping hand.

We expect the political parties to commit themselves to the safeguarding and normal operation of the index, and to oppose any manipulation of it. No matter what the economic context, as far as the index is concerned, for us there will be zero tolerance, and we will of course be analyzing election programs in detail on this point and monitoring candidates’ statements during the election campaign.

Another issue that concerns us is pensions. In reality, political debates should focus on current and urgent problems such as housing, inequality and the ecological transition, but unfortunately some prefer to tackle the subject of pension funding on the basis of hypothetical scenarios for 2070. The OGBL will not accept any further deterioration in our pension scheme – zero tolerance, here too!

In fact, calculations by the Chamber of Employees show that the 2012 reform has already resulted in substantial progressive deterioration, which will mainly affect future pensioners between now and 2052. The 2012 reform, so-called for the younger generations, is in fact directed against today’s youth. The OGBL calls for this reform to be withdrawn, and for the pension readjustment of the end-of-life allowance called into question by the 2012 reform to be maintained in full.

Taxation will certainly be a key issue in the election campaign. For the OGBL, it is clear that the current tax system is unsatisfactory and even reinforces inequalities. It’s not enough for politicians to regularly denounce these growing inequalities in Luxembourg; they must respond to them in concrete terms. And there are pragmatic measures that can help.
Starting with social benefits, which need to be increased in order to regain efficiency: in recent years, social transfers have been reducing the risk of poverty in Luxembourg less and less.

Then, of course, there’s taxation, which is the royal road to reducing inequality. And for this very reason, tax reform must not, as I recently heard from a leading candidate, lead to lower taxes for everyone.

A tax reform worthy of the name, as the next government must implement it, must include several aspects to achieve greater tax justice.
At the level of the tax scale: an exoneration up to the level of the social minimum wage, a widening of the brackets to flatten the “Mëttelstandsbockel” (middle classes’ bump), but also the introduction of higher marginal rates for high incomes.

In order to neutralize the tax increases incurred over the last five years as a result of the government’s decision not to fully adjust the salary scale to inflation, the OGBL is calling for the scale to be adjusted to inflation by 5.5 index tranches, in addition to what has already been retained in the tripartite agreement of March 2023 at the urging of the OGBL. And to avoid further delays in these adjustments in the future, the OGBL is calling for a legal automatism providing for regular adjustment of the scale in line with inflation.

With regard to income taxation, the OGBL urges compliance with the principle of “equal income, equal tax”. This means putting an end to the privileged tax regime enjoyed by capital income compared with salaries and pensions. It is unacceptable that capital income, which is mainly received by affluent households, is not taxed in full and benefits from numerous niches.

Another major injustice, denounced by the OECD, is the virtual tax exemption of movable and immovable assets. The absence of wealth tax for individuals, the absence of inheritance tax for direct descendants, and the absence of a progressive and effective property tax to combat speculation are not only elements of tax injustice, they also represent a major ” loss of revenue ” for public funds, at a time when the challenges of social, ecological and digital transition that need to be financed are enormous.

A final word on labor law – an area that is obviously close to our hearts. Unfortunately, the last five years have not seen any major progress in this area. The positive elements set out in the government agreement have not been implemented. Yet we need to modernize labor law with a view to improving the rights of employees and their representatives.
These improvements must be made within the framework of social dialogue. The OGBL
is ready for this.