The European nation will become the first country in the world to adopt free public transport.
The plans, introduced by Prime Minister Xavier Bettel's coalition government, will see trains, trams and buses run free of charge from next summer. Earlier this year, a new initiative allowed people under 20 years to travel for free and commuters to only pay €2 (about $2) for up to two hours of travel, which covers most of the tiny country. On top of that, there's an extremely low far of only €2 (S$3.1) for two hours of travel, which in such a small country covers nearly all journeys.
A study suggested drivers in the capital spent an average of 33 hours in traffic jams in 2016.
It's hoped that by 2020, all tickets for public transportation will be abolished, leaving no need for fare collection and policing of ticket purchases and a significant reduction in traffic congestion.
Apart from providing free public transport, Bettel's coalition government also intends to legalise cannabis and introduce two new public holidays.
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High school students are also provided with free shuttle services between school and their homes.
According to The Independent, Luxembourg's transport system costs close to €1bn per year to operate, but as a result of the concessionary offers, fares amount to only €30m annually.
The finer details of the proposal are still to be determined - including what to do about first and second-class carriages on trains.
Bettel only just scraped back into government in the recent election.
The CSV, however, lost seats, while the Greens gained three seats. It now holds 31 seats in the 60-seat chamber-12 for Bettel's Democratic Party, 10 for the Socialist Workers' Party and nine for the Greens.