Minister of Finance Yuriko Backes, 14/01/2023

RTL Today - The Lisa Burke Show

In this long discussion, our Minister of Finance for Luxembourg talks about her background, and we also move onto important aspects of life today: indexation and taxation bands.
Yuriko Backes experienced a wonderfully global upbringing: born in Kobe, Japan; went on to study at the London School of Economics, LSE; a Masters in Japanese Studies at the School of Oriental and African Studies, SOAS, London: and another masters in European political and administrative studies from the College of Europe in Bruges.
Professionally, the list is long, interesting and always dedicated to diplomatic or political service. Madame Backes began her career at the Ministry of Foreign Affairs where roles included:
- Permanent Representation of Luxembourg to the United Nations in New York
- Permanent Representation of Luxembourg to the European Union in Brussels from 2001 to 2006.
- Deputy Head of mission at the Luxembourg Embassy in Japan from 2006 to 2008, and as
- Deputy Head of the Directorate for International Economic Relations at the Ministry of Foreign Affairs in Luxembourg from 2008 to 2010.
From 2010 to 2016, Yuriko Backes was the diplomatic adviser and sherpa to Luxembourg Prime Ministers Jean-Claude Juncker and Xavier Bettel. 2016 to 2020 she was the representative of the European Commission in Luxembourg.
From June 2020 until her appointment to the government, she served as Marshal of the Grand-Ducal Court.
Now, of course, we know her as Minister Yuriko Backes, Minister of Finance for Luxembourg.
An International Mind
Minister Yuriko Backes imbibed the childhood of an international family. She talks about the aesthetic, consensual culture of Japan. Her career developed naturally, she says, with multiple languages and respect for other cultures. She is very open-minded and loves “the differences and overcoming differences using communication as a tool”. It helps to find compromises in her current job, she adds.
How do you know what path to follow? Well, after her studies which mixed international relations with Japanese history and sociology, then European Studies, Minister Backes says that they all contributed to being a diplomat. “But it’s always the hand on experience later that makes the difference.”
Over the years her CV has built up a base including the UN, European Institutions, diplomatic posts and more. Was there a best job? Diplomatically, she replies,“I’ve been very lucky and enjoyed every job I’ve done….and never counted the hours of work in the different jobs. One led to the next and the next.”
“When Prime Minister Junker asked me to become his diplomatic advisor and sherpa that was a special moment in my career. Today as finance minister it’s the most challenging [job] of them all”
And what about the work load? What did she learn from her time as advisors to two Prime Minister?
“Prime Ministers travel a lot. This gives you the time to discuss different issues, different dossiers. There’s always so much to read, questions they will ask. You need to keep them up to speed as they cannot be constantly following the press. One needs to consider very carefully what kind of information will be most useful for them for a given meeting”
“It’s constant exchange”
Do personalities change with power?
Minister Backes spent three and a half years with Jean-Claude Junker towards the end of his career, and was assisting and advising Xavier Bettel as he started his premiership. “They grow into their jobs with experience.”
Indexation
We’re set to have two or three indexations this year, which can cripple companies financially. Minister Backes explains why they chose to postpone one indexation to April this year, after tripartite negotiations last year, to make it a little more predictable for employers in an uncertain environment.
If there’s a third index this year government will compensate for the companies. “An important part of what we’ve done is to make sure we can assist and support companies as much as possible.”
“The investment we did with solidarity two package is having results. We will be able to bring down inflation. Also with TVA being put down by 1%.” Statec shows it is having an impact.
So what about talent acquisition?
“I spend a lot of time thinking about talent attraction and talent retention” Minister Backes talks about the housing issue, “We need to try to drive the offer on the market to satisfy the demand”. International schools - the government has done a lot here with free education. But, she notes, “Not all problems in the world can be solved via taxation”
If budget was no problem was would be the first thing you’d do?
“I’d love to be able to provide the opportunity to people to invest in start-ups in green finance for example, the digital transformation. These investments could be deducted from their taxes. I think this is an inclusive way to go forward as a society.”
Taxation bands
“This is a taxation system that I inherited…I’m very well aware of the problem. In order to solve it I think it needs to be part of a larger reform of the taxation system. This year we are in a crisis mode so I have been focusing mainly on crisis management.
“Before I joined the government they had decided jointly that this was not something they could deal with in this legislature because any kind of general reform of the taxation system takes time.
“The tax system we have in Luxembourg needs to be updated to take into account how society has evolved. This really does takes time and takes a consensus in the country. Transition phase towards a new system, towards our way of living.”
Minister Backes also talks about the role of women and how that has evolved. “I’m discussing this with the IMF. How women are perhaps disadvantaged in our tax system is of great interest to me and something I would really like to work on”
Minister Backes underlined that the tax issue “may even take longer than one legislature with a transition phase. I would like to work on this though - it’s fundamental for our country.”
Addressing Paulette Lenert’s comments on Prime Minister’s New Year’s interview that if there are any wage indexation changes, this should go hand in hand with a tax reform to redistribute wealth from top to bottom:
“If we’re going to increase the tax brackets this is not going to bring in enough money to have the huge support for lower income people. One does not pay for the other. We have a very big middle class and it’s just simply not so easy.
“This wonderful idea of increasing taxation for companies - I’m very skeptical about this because I think increasing taxation is not the way forward. We need to attract companies and talent attraction. Part of that is keeping companies here. It’s only by having well established companies that are staying in Luxembourg that we can have companies paying good salaries. So it’s in the interest of the people that we keep good companies here… I have to think long term.”
Alongside being Finance Minister, Madame Backes is a great role model and advocate for women ‘daring to do’. She is in talks with the IMF about how women are perhaps disadvantaged with certain tax systems.