In a collection published by Idea Foundation, the economist Vincent Hein outlines a new idea for co-development between Luxembourg and its neighbours. This would find its source in the teleworking of cross-border workers.
Unlimited remote working granted to border workers since March 2020 continues, and has even been extended until the end of September. This is a blessing for border workers, who can look forward to the summer with the possibility of working from home as much as necessary. It is also a great deal for Luxembourg, which has received a nice gift from its neighbours. But what happens next?
The Idea Foundation is considering what might happen when unlimited telework granted by Luxembourg and its neighbours ends. In particular, the foundation has thought about the aftermath of the permanent return of border workers and the tension generated on transport, the financing of public services, and pressure on cultural or sports infrastructure.
In a collection published this June by the Foundation, the economist Vincent Hein suggests that Luxembourg could strengthen co-development with neighbouring countries. How? His answer is by creating funds, financed by the Grand Duchy and the neighbouring countries, intended to finance infrastructure and services beyond the borders of the Grand Duchy. The idea is similar to that put forward by the mayor of Thionville, Pierre Cuny.
Maximise remote working for cross-border workers
The economist explains his proposal: Pushing the fiscal thresholds for remote working to the maximum (up to the 25% European limit) would be strategic for Luxembourg as well as a win-win for the border regions. He believes this would guarantee about 50 days of telework per year for border workers. That is just over one day a week, taking into account holidays, almost double the current amount.
Of course, income tax would still be levied exclusively in Luxembourg. However, in exchange, Hein proposes Luxembourg would take a percentage of these taxes, which would be reinvested in specialised cooperation funds, to which neighbouring countries would also contribute to invest in infrastructure and service projects.
Such co-development has already been initiated. Luxembourg finances, with France, mobility projects at the border. In Belgium, it redistributes part of the tax collected via the Reynders fund. However, Vincent Hein assures that it is possible to do more.
These funds would be directed more towards local projects, such as training or community facilities that make the territories more attractive.
It would not just apply to mobility. Hein uses the case of nurses as an example. Mobility projects that make it easier for nurses to come to Luxembourg do not solve the problem, but pooling the money to create nursing schools is a start.
According to Vincent Hein, the real challenge for Luxembourg lies in negotiating with neighbouring states: convincing them to renounce the possibility of taxing their residents employed in the Grand Duchy, but guaranteeing them, in exchange, to finance very concrete projects, useful in everyday life or to meet the challenges of the region.
This is the opposite of the famous ‘Christmas decorations’ that Xavier Bettel does not wish to finance. It remains to be seen whether the Prime Minister will be able to appreciate the idea to the point of defending it with his German, Belgian and French counterparts.
For if they were very conciliatory on telework during the crisis, perhaps they are expecting a Luxembourg gesture in return.