Credit: Statec
In its latest "Regards" report, the national statistical agency Statec has revealed that the average household in Luxembourg will save €100 annually as a result of the implementation of free public transport next March.
Drawing on the results of its "Household Budget Survey 2016-2018", Statec has estimated the direct impact of increased fuel taxation and free public transport, as outlined in the 2018-2023 government agreement, on household expenditure. Among its main findings, Statec found that free public transport will mean an annual saving of €100 for the average household, whereas the increase in fuel taxes in May 2019 results in an extra €20 of spending per year.
Nevertheless, the impact of these two changes on a particular household will depend on its use of public and private transport. The related expenditure will in turn vary according to the standard of living or it could be the case that the combination of the two measures is more favourable for low-income households and those living in the centre of the country, because they use public transport more frequently.
On average, households spent almost €1,260 per year on fuel in the 2016-2018 period, compared with around €100 for domestic public transport. While the increase in fuel taxess will entail additional expenses of €20 (+1.7%) for the average household, this additional cost will be offset by the just over €80 (0.13 cents of disposable income) annual savings linked to free public transport.
However, free public transport and higher fuel taxes will not affect all households in the same way. For instance, 56% of households only travel via private transport, whilst almost 30% use both private and public transport. Only 7% of households exclusively use public transport and a similar number use neither type of transport. In this context, those who only travel with their own car will not necessarily see the benefits of free public transport, nor will those who only use public transport be affected by increased fuel taxes.
In any case, households using both modes of transport will save an estimated average of €230 per year: the additional cost of fuel taxation is thus largely offset by free public transport. For households that only use public transport, savings will increase to €390 per year. On the other hand, those who do not use public transport will spend an additional €25 per year on fuel taxes. The high number of households who do not spend anything on public transport (some because they already benefit from free public transport) thus brings the average annual saving per household down to €80.
