Lilja says budget plans burden households too heavily

Progressive Party leader Lilja Dögg Alfreðsdóttir says the taxes and charges proposed in the government’s 2027 budget would place too heavy a burden on households, particularly those with lower incomes, according to mbl.is.

“We believe the pain the finance and economic affairs minister is proposing for households is too great, and the blow too heavy,” Lilja said. She said the party had calculated the effects on a range of households and found that lower-income households would be hit harder.

The Progressive Party estimates the proposed changes would cost a typical household more than 300,000 krónur a year. Its proposed household accord would limit increases in fixed-amount charges to 2.5 per cent, including the kilometre charge, reduce other household burdens, and strengthen interest and child benefit systems.

“As the economy is contracting sharply, we want to protect the welfare system and make sure that those with the least are not hit harder than necessary,” Lilja said.

The party has also proposed spending cuts to offset the cost of its household measures. Lilja said the proposals would not require abandoning the goal of a balanced budget. She argued they could help bring inflation down faster, reducing the government’s interest costs.

Lilja said she strongly supports running a budget surplus, but noted that the government’s primary balance has been positive since 2023. She said inflation and interest costs were the main problems, and argued that tax increases and steep rises in fixed-amount charges would not bring inflation down.

She welcomed Prime Minister Kristrún Frostadóttir’s announcement that some of the initially proposed increases would be dropped, but said the government should go further, including on the kilometre charge. Lilja also said the government should reach a broader agreement on its approach to households.