Last night, Minister of Finance and Economic Affairs Bjarni Benediktsson presented the government’s proposals regarding tax and wage issues that have been under negation with four of Iceland’s labour unions and the Confederation of Icelandic Enterprise (SA). RÚV reports that while Bjarni laid out the proposals for the public during a live new conference on Tuesday evening, earlier that day, he had presented these to the unions in a private meeting. The union chairs were, however, unimpressed by the government’s proposals: “It was hoped that the government’s involvement could rekindle the discussion,” read a statement co-signed by the chairs of each union. “But it’s clear from the government’s proposals that this hope will come to nothing.”
The government’s contribution to the debate involved a significant change to the Icelandic tax system wherein the lowest tax level would be newly set at a monthly wage of ISK 325,000 [$2,718; €2,395] a month. The taxation on this level would be 32.94%. The tax-free limit would be set at ISK 159.174 a month, taking into account a 4% pension contribution.
Bjarni’s presentation explained that the limit for both the first and second tax levels would be ISK 325,000 in order to maximize, he said, the benefits for low-income groups, as well as people with disabilities and the elderly. Per the second level, however, those who earn less than ISK 927,087 [$7,746; €6,830] a month would be taxed at 36.94% while those who make more than that would be taxed at 46.24%.
Bjarni said that on average, taxes would go down more for women than men, and also among individuals aged 18-24. The proposal anticipates a ISK 3.6 billion [$30.1 million; €26.5 million]. In addition, the proposal asserts that the following groups will also benefit from the tax level adjustment: people aged 25 – 34, people with disabilities, the elderly, people who do not own a home, people who receive special housing benefits.
The total impact of the changes to the taxation system would amount to ISK 14.7 billion [$120.4 million; €106.1 million].
Per the unions’ co-signed statement which was issued in advance of the press conference, the chairs of the four unions—VR, Efling, VLFA and VLFGrv—responded to the government’s proposals “ …with anger and disappointment.”
“Negotiations have been in a critical position after the SA business association made an offer last week which would have led to reduced purchasing power for large groups of workers,” read the statement. “The SA in turn rejected a fair counteroffer by the four unions.” The unions plan to hold internal meetings about the issue over the next few days and will then meet with SA again in the company of a state mediator.
“The four unions stand united and steadfast in their demand that workers should be able to live off their wages,” closed the statement, asserting “that the government should make long overdue systemic changes in the direction of justice.”
Bjarni’s Power Point presentation can be accessed in full (in Icelandic) here.
Read an English translation of the union chairs’ statement, here.