Opposition ready to extend fuel VAT cut before September

All opposition parties are ready to attend parliament during its summer recess and approve an authorisation allowing the finance minister and government to extend a reduced value-added tax rate on fuel, Independence Party MP Jón Gunnarsson told mbl.is.

The temporary reduction expires at the end of the month. Unless it is extended, VAT on fuel will rise from 11 per cent to 24 per cent.

Finance and Economic Affairs Minister Daði Már Kristófersson said in an interview with RÚV on Friday that a decision on continuing the reduced rate would have to wait until at least mid-September because parliament must be involved and is currently in recess.

“This will affect the index, and perhaps they simply intend to let that happen. But if the government genuinely wants to take measures that could help resolve issues ahead of talks on collective agreements and other matters, we would attend a parliamentary session and finish the matter before noon,” Jón said.

He said the Independence Party had repeatedly warned during the legislation’s passage that the reduction should remain in effect further into the autumn to avoid the current situation. Those amendments were not approved.

Asked whether the expiry date had been chosen deliberately, Jón said it was clear that the date had been set dangerously close to when the outcome of a breakdown in the conditions underpinning collective agreements would become known.

“It is now clear that the conditions for the collective agreements will fail, and that the government must continue contributing to resolving the issues in order to bring inflation down. If they are serious about trying to keep this under control and work against it, there is no problem with simply convening and completing this part, at least,” Jón said.