Progressive Party says plan could cut household burden by 224,000 krónur

Iceland’s Progressive Party says its budget proposals could reduce a typical family of four’s additional costs next year by more than 220,000 krónur compared with the government’s unchanged budget plan, mbl.is reported.

The party estimates that a couple with two children, combined gross monthly wages of 1.33 million krónur and a 45 million króna mortgage would face an additional burden of 343,500 krónur in 2027 under the budget plan and the effects of economic developments. Under the party’s proposals, that burden would fall to about 119,900 krónur.

The proposals include indexing child benefit amounts and income thresholds to prices, while the government’s budget plan would leave them unchanged. The party estimates the change would cost the state 1.2 billion krónur. It also wants to withdraw plans to abolish mortgage interest benefits from the start of 2027, at an estimated cost of 800 million krónur, and raise tax-free thresholds and tax brackets by 0.5% more than inflation.

The party also proposes capping increases in fixed-amount charges and state agency tariffs at 2.5%. The budget plan generally provides for a 5.2% increase in fixed charges, while a planned 15.8% rise in the mileage charge would be reduced to 2.5%. The party says the cap reflects the Central Bank’s inflation target and wants state and municipal tariff increases to follow the same principle.

For a lower-income couple with two children and a 45 million króna mortgage, the party estimates an additional burden of 343,500 krónur in 2027 and 332,200 krónur in 2028, nearly 676,000 krónur over the two years. Its calculation includes higher charges, the declining value of child benefits, the planned end of mortgage interest benefits, bank tax, and the effects of inflation and interest rates on the mortgage.

The party also gives an example of a higher-income household with monthly wages of 3.32 million krónur and an 80 million króna mortgage, estimating its additional burden in 2027 at about 353,000 krónur. It says the examples are for comparison and are not intended to represent households across the country. The estimated annual burden is equivalent to about 26% of one month’s wages for the lower-income household and 11% for the higher-income one.

The Progressive Party estimates the total cost of its proposed amendments at nearly 24 billion krónur in 2027. Other measures include reversing planned increases in healthcare co-payments, withdrawing a proposed 1.5 billion króna cut to rehabilitation pensions, protecting upper secondary schools, research and innovation from planned spending restraint, and temporarily accelerating depreciation allowances to encourage business investment.