LUXEMBOURG – A proposal to reduce the annual subscription tax from 0.06% to 0.05% that investment funds in Luxembourg pay on their net assets under management is included in the draft budget for 2002 to go before parliament in September.

Jean-Jacques Picard of the Luxembourg investment fund association, ALFI, says they welcome the initiative and have been asking for the rate to be progressively reduced for some time.

Picard points out that whilst a one basis point looks small on paper, in reality, it could translate into a considerable sum, saving funds money and allowing them greater net returns. “It could be a nice little sum,” he says.

Though the proposal is to be discussed in parliament, Picard believes that it is as good as passed, since the draft has the full backing of the socialist party who make up the parliamentary majority. “There is practically no opposition to the proposed reduction.”

ALFI has more than 750 member funds and is Luxembourg’s main representative body for the country’s investment community.