Union leader urges state to scrap planned 5.2% fee rise

Vilhjálmur Birgisson, chairman of the Icelandic Federation of General and Special Workers (SGS), is calling on the government to cap increases in state fees at 2.5%, matching a commitment by municipalities. Morgunblaðið reports that the government’s 2027 budget proposal includes a 5.2% rise in state charges and a 15.9% increase in the kilometre charge.

Municipalities agreed to keep all fee increases within the 2.5% limit at the Association of Icelandic Local Authorities’ national congress in Akureyri on 23–25 September. Birgisson said no municipal fees should be exempt. Measures taken in 2024 focused only on families with children and did not achieve their intended results, he said.

Birgisson estimates that bringing the government’s increases down to 2.5%, including the kilometre charge, would cost the Treasury about ISK 7.4 billion.

He said the government had a strong interest in reducing inflation because it has around ISK 744 billion in net inflation-indexed debt. The target is to bring inflation down to 3.5% by September next year. If it instead remained at its current level of 5.6%, the cost to the Treasury would be about ISK 15.6 billion, Birgisson said, roughly twice the cost of reducing the fees.

Municipalities have more than ISK 500 billion in inflation-indexed debt, while households owe about ISK 2.3 trillion, he said. In Birgisson’s estimate, lowering inflation by two percentage points over the next 12 months would benefit households by about ISK 46 billion.

Birgisson said the effort required participation from the state, municipalities, retailers, service providers and all companies with an influence on prices. Confirmation from all parties is needed by 8 October, the deadline for deciding whether to terminate collective agreements. The Confederation of Icelandic Enterprise is expected to encourage its member companies to take similar action, he said.