Kopavogur mayor condemns tax rises in government budget

Ásdís Kristjánsdóttir, mayor of the municipality of Kópavogur, has criticised the government’s 2027 budget proposal, saying its planned 5.2% increase in public charges will put pressure on inflation and inflation expectations, mbl.is reports.

In a Facebook post responding to the budget proposal presented by Finance Minister Daði Már Kristófersson at a press conference on Monday morning, Ásdís said the government had been elected with a clear promise to lower inflation and interest rates.

“Neither has happened. Inflation has increased and interest rates have risen since the government took office,” she wrote.

Ásdís said the Central Bank of Iceland had pointed out that increases in public charges had contributed significantly to rising inflation. Kópavogur had chosen a different approach, she said, limiting fee increases for families with children to 2.5% in 2026, in line with the Central Bank’s inflation target.

Although achieving a balanced budget was a long overdue goal, Ásdís said the government was largely financing the deficit through 23 billion Icelandic krónur in tax increases.

She also said the government’s so called fiscal restraint relied to a significant extent on postponing projects, which was expected to save 26 billion krónur, rather than reducing operating costs.

Ásdís said the government should set an example by implementing genuine spending restraint, reducing tax increases on individuals and companies, and limiting fee increases to the Central Bank’s inflation target.

“A great deal is at stake for Icelandic society,” she wrote.