Iceland’s PM: VAT on Food Will Not Be Raised Skip to content

Iceland’s PM: VAT on Food Will Not Be Raised

Prime Minister of Iceland Jóhanna Sigurdardóttir said it is out of the question to raise the income tax for average earners and to increase the value added tax (VAT) on groceries from seven to 25.5 percent as suggested by the International Monetary Fund (IMF).

Prime Minister of Iceland Jóhanna Sigurdardóttir. Photo by Geir Ólafsson.

The Icelandic government asked the IMF to review the Icelandic taxation system and suggest how to increase the state treasury’s revenue in the coming years, visir.is reports.

The IMF suggestions include increasing the VAT on food and the income tax for average earners, as well as a 47-percent high-income tax on people who earn more than ISK 375,000 (USD 3,000, EUR 1,400) per month.

Sigurdardóttir said raising income taxes in this manner is not an option. However, it is good to hear the IMF’s suggestions, she added.

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