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Initially scheduled for August, the energy tax credit is now expected to be introduced in July, according to a Paperjam report.
The energy tax credit (CIE) will result in a pay rise for all Luxembourg workers earning less than €100,000 per year.
It is one of the Luxembourg government’s flagship measures to help households cope with soaring energy prices. The CIE is intended to compensate for the postponement of the next wage indexation, which was due to be triggered in August 2022. However, with the inflation rate higher than expected, the latest estimates by the National Institute of Statistics and Economic Studies (STATEC) indicate that the next wage indexation could be due as early as June.
If this turns out to be accurate, the compensation mechanism foreseen by the government will come into force as of 1 July. This would mean an increase for all workers who earn less than €100,000 gross per year. The government has repeatedly promised that this increase should “more than compensate” for the postponement of the wage indexation for the lowest salaries.
For those earning the minimum social wage (€2,313.37 gross or €1,960.36 net), a second wage indexation would have meant an increase of 2.5%, i.e. an increase of €33.66 per month compared to €84 net per month with the CIE. The same applies to someone earning €5,000 gross per month, since wage indexation would have added €62 net to their salary compared to €78 euros with the energy tax credit.
Of course, unlike the CIE, the index is a permanent increase. But according to information obtained by Paperjam from the Ministry of Finance, it will be maintained until April 2023, when the next wage indexation should be triggered for everyone. Those with higher salaries, on the other hand, would have benefited more from the index than from the CIE, as the latter’s amount is degressive.
The energy tax credit is available to both residents and cross-border workers, and no action is required to receive it. The CIE will simply be added to the payslips of all employees working in Luxembourg. It will be also available to pensioners, recipients of the Social Inclusion Income (REVIS), and those receiving the Allowance for the Severely Disabled (RPGH).