Fishing Industry Profits Spark Wealth Distribution Debate

fishing in Iceland

Iceland’s largest seafood companies made huge profits last year, if the first published financial statements are any indication, Fréttablaðið reports. Opposition MPs are arguing that the industry should be taxed more so its earnings are more evenly distributed throughout Icelandic society. According to Minister of Fisheries Svandís Svavarsdóttir, the nation sees the industry as unjust, largely because consolidation of fishing quota has funnelled large profits into the hands of very few individuals.

Billions in profits

At the end of 2020, the seafood industry’s equity was evaluated at ISK 325 billion [$2.6 billion; €2.4 billion]. In the same year, the industry paid just under ISK 4.8 billion [$37.7 million; €35.2 million] in quota fees, while the state treasury faced record financial challenges due to the coronavirus pandemic.

The fishing industry has continued to grow despite the pandemic recession. Between 2020 and 2021, the total value of catch in Iceland increased around 9%, from ISK 148.3 billion [$1.2 billion; €1.1 billion] to ISK 162.2 billion [$1.3 billion; €1.2 billion], according to figures from Statistics Iceland. Prospects continue to be good, especially since the price of fish has risen dramatically in the wake of the Russian invasion of Ukraine.

Four companies hold 60% of quota

Just four companies hold around 60% of Iceland’s fishing quota: Samherji, Brim, KS, and Ísfélagið. Brim reported profits of ISK 11.3 billion [$88.8 million; €82.9 million] last year, and Síldarvinnslan’s profits are similar. In the first three months of this year, Síldarvinnslan has made profits of nearly ISK 4 billion [$31.4 million; €29.3 million]. Samherji, Kaupfélag Skagfirðinga (KS), and other fishing industry giants have not yet submitted financial statements from last year, but similarly high profits are expected.

In a column published in Morgunblaðið yesterday, Minister of Fisheries Svandís Svavarsdóttir stated that the nation viewed the consolidation of fishing quota in so few hands as deeply unjust, and that it felt that this collective resource was not distributed fairly.

Fishing money in other sectors

Opposition MP and Social-Democratic Alliance Chairman Logi Einarsson echoed these words. “We have watched a huge accumulation of wealth in very few hands, which has also led to a small number of individuals not only holding the majority of fishing quota, but due to this same wealth, accumulated assets in many parts of society, in unrelated sectors.” Logi named these sectors as the media, real estate, transport, grocery stores, energy, and even insurance and banking.

“This creates a very unhealthy situation,” Logi continued. “And now that the entire public expects worsening livelihoods and various healthcare and welfare services are underfunded, quota holders should certainly pay more toward public expenditure, they are well capable of it, to say the least.”

As Gasoline Use Drops Iceland Must Find New Ways to Fund Infrastructure

driving in reykjavík

Icelandic authorities are looking into new ways to tax vehicle use, Finance Minister Bjarni Benediktsson stated at a tax conference this morning, RÚV reports. Road and transport infrastructure in Iceland is currently funded by tax revenue from gasoline, and that revenue has decreased significantly in recent years, due to electric car use and other factors. 

“It’s important that we create a bridge from the old system and into the new one to ensure the treasury has enough revenue in the long term in order to support the development and maintenance of transport infrastructure,” Bjarni stated, adding that creating a new revenue system for transport and infrastructure was one of the biggest tax-related projects of this government term. The government would look at other ways of taxing vehicles, including by the distance driven, according to Bjarni. Any new taxation system implemented would need to continue to encourage consumers to buy greener vehicles, however. “We’ll see how it goes, that’s one of the big projects and we have already started,” Bjarni stated.

The Finance Minister also reviewed the government response to the ongoing pandemic at today’s conference. The taxation system had been amended to support homes and businesses due to the pandemic and help them grow out of the ensuing difficulties. Bjarni added that the Central Bank’s rate hikes could be taken as a warning, and that public funds in support of businesses and individuals must be reduced when possible.

Icelandic Artist Royalties No Longer Subject to Income Tax

Masterkey Studios

Revenue from copyrighted material will now be taxed as capital gains in Iceland, and therefore not subject to income tax, RÚV reports. Performing rights organisations are welcoming this change, passed by the Icelandic parliament yesterday.

Musicians are one example of copyright holders who get paid royalties for the use of their compositions. The new amendment means they will no longer have to pay income taxes on this revenue. The legislation will also affect other types of creators, such as writer and visual artists. Icelandic Music Association Chairman Jakob Frímann Magnússon welcomed the change in a Facebook post, calling the legislation unique and its implementation the result of a 25-year battle.