Rural municipalities lose taxpayers as residents move to cities

Rural municipalities are losing residents of working age to larger cities, weakening their tax base and putting pressure on local finances, DR reports. Lemvig is among the municipalities most affected, and its campaign to attract newcomers urges people to move there.

“Move to Lemvig,” reads an advert on a yellow bus travelling through Aarhus morning traffic. The campaign also includes newspaper and magazine adverts, a website and videos for TV2 Play and social media. One advert promises “more time for what matters”. Lemvig Municipality would not disclose the campaign’s cost.

Excluding island municipalities, Lemvig has seen the largest decline in the share of residents of working age in recent years. Mayor Jens Lønberg of the Conservative People’s Party said that group is crucial to tax revenues and the municipality’s finances.

“Without equalisation, it simply would not work,” Lønberg said, referring to the system that redistributes money among Denmark’s municipalities. He said the municipality has a relatively large tax base among people who earn money there, but not enough residents to make the most of it.

A recent budget agreement described efforts to attract residents as “more important than ever” following the closure of FMC Rønland, formerly Cheminova. Bornholm, Lolland, Tønder, Struer and Odsherred are also among the municipalities facing a similar population trend.

The contrast is stark with municipalities that are attracting residents who contribute more to local coffers than they draw from them. In Høje-Taastrup, on the outskirts of Greater Copenhagen, population growth has been so strong that the focus is on what kinds of homes to build, Mayor Michael Ziegler of the Conservative People’s Party said.

“We are getting more resourceful residents in our municipality. We are also getting a higher income level, and that is good for municipal finances, both now and in the long term,” Ziegler said. He added that equalisation means municipalities do not keep the full financial benefit when their situation improves.

The number of residents of working age in Høje-Taastrup has risen sharply over the past six years. Realdania analysis chief Henrik Mahncke said recent figures show an increasing imbalance in parts of the country. He said municipalities within reasonable distance of growing cities have benefited, while young people continue to move towards larger urban centres.

People of working age can help indicate a municipality’s potential tax revenue. Their uneven distribution is linked to longer commutes, which have made suburban municipalities more popular, as well as falling birth rates and an ageing population farther from the major cities, Aalborg University senior researcher Helle Nørgaard said.

Curt Liliegreen, director of the Housing Economics Knowledge Centre, said the movement of residents is widening the difference between urban and rural municipalities.