Minister says budget cuts will accompany tax and tariff rises

Finance Minister Daði Már Kristófersson says Iceland’s budget plans call for spending cuts alongside higher tariffs and taxes, mbl.is reports. He said the government aims to achieve a balanced budget through spending restraint accounting for two-thirds of the adjustment and increased revenue accounting for one-third.

“It is very difficult to reduce government spending quickly,” Kristófersson said at a Council of State meeting on Monday. He said the nature of government operations made sharp cuts difficult and that most people wanted to protect certain basic systems of society.

“If we look at history, few finance ministers have managed it. Perhaps it happened most notably after the financial collapse, but otherwise the trend is usually in the other direction,” he said.

Kristófersson said revenue measures linked to tariff and tax increases were comparable in scale to those introduced since 2022. The state typically adds around 15 billion to 20 billion Icelandic krónur in annual revenue measures, he said, to maintain the existing position.

He added that the measures were not increasing in size as a share of gross domestic product.