Majority of Icelanders pay more taxes than 10 years ago Skip to content

Majority of Icelanders pay more taxes than 10 years ago

90% of the Icelandic nation is comparatively worse off because of higher effective tax rates in the last 10 years, reports news station NFS. According to a professor at the University of Iceland, the government’s claim that taxes in Iceland have decreased “is the biggest lie in Icelandic politics in many decades”.

In an article by professor Stefán Ólafsson, in yesterday’s Morgunbladid, Ólafsson argues that from 1994 – 2004 higher effective tax rates have affected most Icelanders.

According to NFS, figures show that the effective tax rates increased by far the most for low wage earners including the disabled, and senior citizens.

Taxes on families that earned under ISK 250,000 per month in 2004 increased about 14 – 15% in the ten year period meaning that these families paid ISK 448,000 in taxes in 2004 compared to ISK 275,000 in 1994.

NFS reports that the tax burden has increased for all wage earners except for those earning more than ISK 1.2 million per month – they are now paying comparatively lower taxes than they did in 1994. According to NFS this means that everyone except the highest wage earners are worse off after changes to the tax code to the effect of lowering tax rates but removing the inflation indexing of the individual deductible. Stefan says that it is “not a matter of debate” whether or not taxes have increased or decrease.

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