The Althingi parliament National Budget Committee will review the prerequisites of the national budget next week in light of the collapse in the OMX Nordic Stock Exchange in Iceland. The collapse could result in lower tax revenues than expected.
“If actions have to be taken they will be handled by the economy office of the Finance Ministry,” Gunnar Svavarsson, MP for the Social Democrats and chairman of the National Budget Committee, told Fréttabladid.
Representatives of the economy office will determine whether it is still realistic to estimate that the 2008 national budget will profit ISK 35 billion (USD 558 million, EUR 378 million) through capital tax as well as through income tax of legal entities, currently estimated at ISK 45.5 billion (USD 726 million, EUR 491 million).
The capital tax of individuals was ISK 31 billion last year, according to the 2007 national budget.
“The plummet in the stock exchange could affect these items,” Svavarsson said, but he would not say whether he believes the prerequisites of the 2008 national budget have become unrealistic as the economy office of the Finance Ministry has to determine that.
“If nothing changes one could assume that capital tax will be low [this year],” director of the University of Iceland’s Institute of Economics, Gunnar Haraldsson, told Fréttabladid.
