Opposition politicians accuse government of repeating inflationary policies

Nothing in the government’s budget proposal or parliamentary agenda is aimed at improving the economic situation, mbl.is reports. Instead, its tax increases uncomfortably resemble the situation last winter, according to Jens Garðar Helgason, deputy chairman of the Independence Party.

“We are just going into Groundhog Day. We are going back into December,” Jens Garðar said on Morgunblaðið’s Dagmál programme, where he discussed the economic situation with host Andrés Magnússon and Þorgrímur Sigmundsson, a Centre Party MP.

Jens Garðar said the budget proposal included tax increases of around 34 billion krónur and criticised the government for not reducing public spending. In his view, higher taxes and fees would work against the goal of lowering inflation and creating room for interest-rate cuts.

“The carousel will continue,” he said, adding that the opposition would continue to argue that the measures could “fuel inflation”.

Þorgrímur agreed with the criticism and said the budget proposal was directly likely to increase inflation. He highlighted a planned 15.9% increase in the kilometre charge, saying it amounted to a 10.7% real increase after taking price levels into account.

Andrés also pointed out that the government was using an inflation rate of 5.2% when increasing amounts in the proposal, even though the authorities had previously emphasised the role of inflation expectations.

Jens Garðar said this showed a contradiction in the government’s arguments. He criticised it for calling for restraint from companies, wage earners and municipalities while the state continued to increase charges.