2023-12-03 15:58:49
Introduced in 2021 with the aim of helping Luxembourg meet its climate objectives, the CO₂ tax is not always socially fair. It is “essentially regressive and therefore weighs more on low-income households,” according to a scientific note from the Chamber of Deputies, published this week. Households with the lowest incomes tend to devote a larger part of their budget to purchasing taxed petroleum products.
But the note also mentions “social compensation instruments” such as free transport, various subsidies and targeted VAT reductions, or even bonuses for electric mobility. She also cites CO₂ tax credits and the cost of living allowance. The document relays demands for an analysis of the effectiveness, targeting and environmental impact of current subsidies.
The CO₂ tax, currently 30 euros, must increase by five euros per year until 2026. Each increase, effective January 1, increases fuel prices by a few cents at service stations.
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