The tax and transfer system in Luxembourg

This publication addresses the redistribution of income among households in Luxembourg. Net transfers to households, computed by subtracting taxes on income, on consumer expenditures and social contributions from gross social benefits (including pensions and family allowances) depict the redistributive power of the Luxembourg social system. when considered by equivalised income classes. The results of this study show that the tax and transfer system is quite redistributive, in the sense that 40% of the wealthiest households contribute to the income of the remaining 60%. It appears that all income classes are burdened by compulsory levies (tax income, value added tax and social contributions) and that VAT is regressive.