Head of Iceland’s Independence Party, Bjarni Benediktsson yesterday described the government’s tax plans as “crazy”. He told the Althingi parliament that the future of Iceland’s tax system should be discussed right away. It was not; but it was decided to debate taxes on Friday.
Yesterday’s parliament meeting began with unscheduled questions from the Independence Party on the rumours surrounding the government’s tax increase plans. RUV reported on the proposed tax hikes on Sunday evening.
“Is it true what we hear in the media that you plan to wreck the tax system, implement a three-tier system and put taxes on individuals up to 50 percent? That taxes on individuals will go up from 37 percent to 47 percent in the first group,” Benediktsson said in Althingi. “That’s about a 30 percent tax increase on the individual. For what possible reason are we not discussing this in parliament?” he asked.
Katrin Jakobsdottir, Vice chairman of the finance minister’s Left Green Movement responded that the government had long since decided to implement a mixed approach to reigning in the national budget using a mix of spending cuts and tax increases. She said it was interesting to hear Benediktsson describe the plans as crazy.
“We are talking about changing the tax system into a tiered system like the other ‘crazy’ Nordic countries have, for example, chosen in their tax systems,” Jakobsdottir contested. “I don’t understand how it’s possible to denounce the thought of initiating a tiered system here which would spread the burden in a fair manner,” she continued.
While the highest group (those earning over ISK 500,000 per month) would see significant tax increases, Benediktsson failed to take note that those in the lowest tax bracket would actually enjoy a very small tax decrease.
“For what possible reason are we not discussing this in parliament?”
Iceland’s parliament is getting too big for its boots. The elected government should determine its preferred tax policy and then inform parliament which can subsequently debate a specific proposed policy. For some reason, Iceland’s opposition wants to debate the government’s ideas whilst they’re still being formed. I think Iceland’s political system would work more effectively if its government had more power relative to its opposition. Just look at the ongoing Icesave process as an example – the government’s relative lack of authority emasculates it.
Opposition parties. Can’t live with them, can’t deport them to gulags.
I don’t suppose he fleshed out how his party would close the gap?
Yea, right…
They seem totally forget what 500k ISK now are not the same as 500k before 2008. Or i missed something and exchange rates are back to 07 level? If not – trowing away (and I mean it, cause community most likely wont get a single krona out of it) half of my salary which is already waaay below European average doesn’t seem like a good idea.
As much as I hate independence party – I must agree with craziness of such drastic increase.
Sounds like Bjarni is scared his buddies who earn over 500,000kr will be taxed at a higher rate when they are the ones that caused the crash with their greed
Iceland would be a perfect candidate to Swiss-style direct democracy; good education level, no ethnic issues, internet… People themselves could decide on those things they hold important.
Unfortunately the political and business elite have vested interests in keeping the situation intact. A lot of money can be squeezed from an islandful of people.
“Opposition parties. Can’t live with them, can’t deport them to gulags.”
In the past, Iceland assigned “outlaw” status to the worst criminals, meaning they could then be lawfully hunted and killed – as they were literally outside the law. Johanna should rush through a bill declaring Independence Party MPs to be outlaws. They may try to hide in the mountains, but possies would despatch them like lost polar bears. Who needs gulags…
Jim, I want to remind you that Johanna&Co got same number of votes as Independence party. So in fact she has no right to speak on behalf of all people of Iceland.
None of them – government or parliament – can, actually.
There might be times when people needs a change for the first time. Ever considered Monarchy of your own ? (or sell Iceland to Lichtenstein ;) )
“Johanna should rush through a bill declaring Independence Party MPs to be outlaws. They may try to hide in the mountains, but possies would despatch them like lost polar bears. Who needs gulags…”
She could sell hunting permits and get a few bucs for the state tresury,
it would be like making the world a better place, recycling toxic waste, and having fun, all at the same time,
this may actually happen because of the corruption we are seeing every day, and if if does we will be seeing all the politicians running for the hills, not just the IP.
500,000 Isk is only a little over 2000 Euro before taxes . So after taxes you will be left with a little over 1000 Euro!!!!!!! and this is considered a high income what a F*cking joke……… What about the poor suckers working for about 150,000 Isk per month , I am surprised they have not starved to death.Welcome to peasant nation!
Putting it in perspective a moment Arthur,
I don’t know anyone who currently brings in less than 150,000 a month AFTER tax. I know they exist; but they are a small minority. I know from experience that the lowest paid preschool assistants get more than that.
And if a couple are both on that much, they can easily afford 100,000 rent plus 20-40,000 on supermarket bills. As there is no council tax and electric and water are really cheap, their leftover money is still enough for a very high quality of life.
My fiancé and I bring in about 300,000 after tax a month and we would be quite wealthy by now if it weren’t for the foreign debts piled up before moving here (up from 70,000 to 0ver 100,000 paid each month…oh the sob story!).
Runestone i dont think u r living in iceland many people r getting 120000 to 150000kr every month just ask the folks working in fish factories or cleaning services.Iceland has a budget deficit of billions so the only way to slash this is increase the tax and cut public spending,lets tighten our belts guys its not gonna be easy after christmas.
Arthur Million said:
“500,000 Isk is only a little over 2000 Euro before taxes . So after taxes you will be left with a little over 1000 Euro!!!!!!! and this is considered a high income what a F*cking joke”
————————-
You have heard of tax allowances?
and obviously you did not learn your maths in an Icelandic school :)
As part of an ongoing survey here into education standards around the world please let us know where you were educated.
>and obviously you did not learn your maths in an Icelandic school :)
Although I think Mike would say he did :D .
@Arthur:
Tax is AFAIK never, in any country, taken at a higher rate on the whole income. So in your example, as EUR 2k is less than ISK 500k, that person will not pay any tax at that higher rate.
If we say that ISK 500k = EUR 2.7k, and if they earnt EUR 3k, then only that last EUR 300 would be taxed at 47%.
There were some Icelandic politician overe here to discuss a loan about NKR 100 000 000 000 (ca ISK 2000 000 000 000) – perhaps this is the reason we have a “crazy” taxes here. I do hope that Iceland can manage to repair the economy and the serving systems, but it seems that some politicians need understands things in the right perspective.
“Tax is AFAIK never, in any country, taken at a higher rate on the whole income”
But the UK’s sneaky new income tax gets around that! For every pound you earn over £100K, your tax free personal allowance is reduced by half a pound. Sneaky Mr Brown strikes again…
>But the UK’s sneaky new income tax gets around that! For every pound you earn over £100K, your tax free personal allowance is reduced by half a pound. Sneaky Mr Brown strikes again…
I’d missed that. That’s mad; not because I think that people earning over £100k should be cut some slack, but because rules should be simplified rather than complicated. Especially when we’re talking relative peanuts.
Jim you ou posts are getting more and more desperate drivells. The Red-Green government is about to fall. The IceSave agreement will finally go to court where it should have gone many many months ago. You must accept this reality.
Jim write :
>Iceland’s parliament is getting too big for its boots. The elected government should determine its preferred tax policy and then inform parliament which can subsequently debate a specific proposed policy.
The whole point of the parliament and certainly in the proportional representation is that it represent the people as whole not some small group of voter.
Icelandic parliament is functioning exactly as it is meant to.
Bjarni Ben does speak for the majority of tax payer in Iceland. You can be sure because he has actually looked into what peopel believe even if you think it is because of polstering and such to try and get the popular policies. But he does have also actual recent business experience in running something real – ie not a bank.
This is exact opposite of demoges Jóhanna and I am sorry to say Steingrímur J who floated away from rest of fellow Icelanders months ago. They live in they own little world of they hard left time travellers from 1978.
Earth to Jóhanna and Steingrímur.
This is 21st century.
Ideas of graduated progressive income tax again ( plank 2 straight out of communist manifesto ) state ownership of banks and allocation of credit ( plank 5) etc. are more than idiocay of highest nature. They literally are insanity.
People will leave. GDP is needed to be grown not a stone squeezed with a stone crusher to try and find blood in it.
The lack of originality is amzing too. Listening to that swivel eyed Education minster Katrín J talk about the ideas being good because they are in other Nordic country?
This is about equality. They want remaining Icelander who do not leave country to be equal. Equally poor.
And maybe next they will pass law to stop people from leaving.
Welcome to gulag Iceland. Or ..?
Fisy…
I wasn’t talking about proportional representation, but about the relative effectiveness of parliamentary processes. In general, it is more efficent to debate upcoming policies after the government has declared what the potential policy may be. Otherwise, opposition MPs could waste their parliamentary time debating whether the government should ban Fanta Orange on Wednesdays – even though the government has no intention of addressing Fanta Orange consumption on any day of the week.
Also, if Icesave eventually goes to court as you expect (ie according to the wishes of parliament but against the wishes of the government), then that merely reinforces my point that Iceland’s current government has been emasculated by its relative lack of parliamentary authority. The government is failing to govern – it’s merely a contributor to a debate. Even Obama is now drifting towards similar behaviour with his indecision on increasing troop numbers. Decisions, even bad ones, are better than no decisions.
TWR / Arthur Million: The actual value of the Krona against the dollar or the euro is totally irrelevant for a tax system.
That’s a lot. Tax deductions should be reasonable and should jive on how much is the earnings of an individual. Also, they should acknowledge the state of living of that person, meaning, tax deductions should be depending on your standing in the economy.
Iceland will sink more and these new tax measures will not do much but to decrease the loyalty of the people who live in this country. The country will roll back to the point of the economical situation as this was 30-40 years before. Most of the young population will abandon this country gradually. One small elite of rich families will rule the land and the rest will barely have enough money to survive. MISERY…… that is the future of Iceland! Icelanders let the criminals who traded the whole nation to go away and now they are paying for this. Icelanders weren’t clever enough to catch these traders and handle this correctly.