South Iceland municipalities challenge rising taxes and charges

Municipal leaders in South Iceland are warning that rising state taxes and charges could undermine businesses and communities in the region, mbl.is reports. The warning was set out in a resolution adopted at the recent annual congress of the Association of Southern Municipalities.

The resolution criticises the lack of an overall assessment and meaningful consultation in preparing and introducing the new charges. It says the government is proposing broad tax increases and other revenue measures while placing particular pressure on industries that have driven employment and value creation in South Iceland.

“About half of the new tax revenue is to be collected in the South Constituency, despite just over 9% of the country’s residents living there,” the resolution says.

The municipalities say higher value-added tax on admission to bathing lagoons, a mileage charge, road tolls, the air-bridge scheme and uncertainty over the legal framework for aquaculture, among other measures, could have serious consequences for residents. They warn that the changes could reduce revenues for both municipalities and the state and lower living standards.

The resolution describes a contradiction in government policy: calling for more investment, stronger businesses and more resilient communities while introducing rising charges and an unpredictable operating environment.

The municipalities are calling on MPs from the South Constituency, across party lines, to seek a delay in approving the proposed tax increases and other burdensome changes. They say an independent, comprehensive assessment should first examine the combined effects on businesses, investment, value creation and living conditions in South Iceland.