(CS) Finance Minister Luc Frieden spoke out once again against the representation of Luxembourg as a tax stealer in French and British media reports at the Luxembourg Business Compass presentation.

The minister said that the journalist he had spoken to for the French television programme had prejudices and clichés in mind, which there was no arguing against. Presenting Luxembourg as withholding taxes from other countries, however, was “factually wrong,” the minister said, and not to be confused with tax evasion.

Frieden said the reports harmed the image of Luxembourg, saying the country was open to discussions on how to cooperate with the international community on the issue, while differentiating between bilateral relations, and debates led on a European or global scale.

Ultimately, however, Frieden said that Luxembourg’s tax system was legal and within international law. He added that he wants a system for Luxembourg enabling the Grand Duchy to remain attractive. Taxing less than other countries was not “illegal or unfair,” he said.

“Poor discussions” on Financial Transaction Tax

On top of a lack of international initiative to discuss Luxembourg’s situation within the framework of tax systems across Europe, the Frieden also criticised the poor level of discussions on the Financial Transaction Tax (FTT).

While not being principally against such a tax, the Finance Minister said a clear purpose of the tax and how to raise it would have to be formulated.

Photo: Gerry Huberty

He also warned that such a tax would not simply solve the problem of state finances around Europe, as is widely assumed.

Finally, Frieden argued that unless the FTT were centralised such a tax would merely lead to the relocation of businesses to other countries not levying such a tax, adding that a discussion should also revolve around decisions which can be made on a national level to tax companies more efficiently.

A plan for the future

Asked about his vision for the country’s tax system, the Finance Minister replied that rather than a vision he had a plan for a system that is “fair, reasonable and predictable.”

It should be fair in the sense that “everyone contributes,” with everyone paying a reasonable and sustainable amount. Additionally, tax systems should be stable in order for future planning both on a professional and private scale.

This plan, however, was only possible through sound public finance, Frieden said, adding that the short-term relief of spending in times of crisis does not ensure long-term growth.