Increased Taxes and Tariffs for Reykjavík Residents Skip to content

Increased Taxes and Tariffs for Reykjavík Residents

The majority coalition in Reykjavík City Council announced the 2011 budget yesterday, which includes considerable increases of taxes and tariffs for capital residents, including an increase of the local tax from 13.03 to 13.20 percent.

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From Reykjavík. Photo by Dagbjört Oddný Matthíasdóttir.

According to the majority’s calculations, the expenses for a family of four will increase by almost ISK 50,000 (USD 427, EUR 327) per year, when the local tax, real estate tax, lot rental, kindergarten fees and cost of school meals and recreational facilities are taken into account.

However, the Independence Party believes that the increases for families with children might increase by as much as ISK 150,000 (USD 1,300, EUR 980) per year.

The difference lies in that the Independence Party takes into account items such as price increases at Reykjavík Energy, which could amount to up to ISK 30,000 (USD 256, EUR 196) per month.

Chairman of the City Council Dagur B. Eggertsson told Fréttabladid that the majority’s goal is to achieve a balance in rationalization measures.

“We tried to spare families from additional costs but at the same time we wanted permanent savings to take place,” he said.

Eggertsson pointed out that the budget shouldn’t come as a surprise given that it is similar to that of many other municipalities.

Hanna Birna Kristjánsdóttir, leader of the Independence Party in the City Council, dismisses Eggertsson’s arguments.

“To live in the country’s largest municipality should involve that during rationalization periods it should be less expensive to live here than elsewhere. But with these increases the majority is changing the living conditions in the city and it will be a tough blow to city residents, especially those with children,” she concluded.

Kristjánsdóttir stated that it hadn’t been necessary to undertake such measures; modest increases would have been more natural in light of the strong position of the city’s funds with a liquid cash position of ISK 18 billion (USD 154 million, EUR 118 million).

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