Iceland’s “crazy” new tax plans

bjarni-benediktssonHead 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.

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