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Supertax Introduced in Iceland

The government is planning to increase taxes as of July 1 to narrow the national budget gap and increase savings. A supertax will be introduced for everyone earning more than ISK 700,000 (USD 5,500, EUR 3,900) per month.

Photo by Páll Stefánsson.

According to Morgunbladid, the supertax percentage grows with higher salaries.

For example, an individual who earns a monthly salary of ISK 800,000 (USD 6,200, EUR 4,500) will as of July 1 pay an additional amount of ISK 8,000 (USD 62, EUR 45) in income tax, ISK 263,000 (USD 2,100, EUR 1,500) instead of ISK 255,000 (USD 2,000, EUR 1,400).

Whereas an individual earning ISK 1 million (USD 7,800, EUR 5,600) per month will contribute with an additional monthly sum of ISK 24,000 (USD 187, EUR 135) and pay ISK 354,000 (USD 2,800, EUR 2,000) in income tax instead of the previous ISK 330,000 (USD 2,600, EUR 1,900).

Furthermore, the capital tax will increase from ten to 15 percent next month while the maximum allowable income without paying capital tax will increase to ISK 250,000 (USD 2,000, EUR 1,400).

It means that individuals who have more than ISK 1 million in annual interest income will have to pay an additional sum of ISK 12,000 (USD 94, EUR 67) in capital tax.

Additionally, the social security tax will increase and a so-called “sugar tax” established, a taxation of all products that contain high amounts of sugar, such as soda and candy.

Minister of Finance Steingrímur J. Sigfússon also said it is impossible not to make cuts to salary expenses at state-run institutions if the ISK 20 to 25 billion (USD 156 to 195 million, EUR 112 to 140 million) gap in the state budget is to be bridged.

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