Seltjarnarnes considers raising local income tax

Seltjarnarnes municipality may raise its local income tax to address a difficult financial situation, mbl.is reports. Mayor Þór Sigurgeirsson said all options were being considered as officials discuss measures to respond to the deficit.

The municipality’s minority said its finances were in a serious position after a six-month financial report presented to the municipal council showed a loss of 521 million Icelandic krónur in the A division and a 411 million króna loss for the consolidated A and B operations.

The minority said the loss during the first half of the year had already exceeded the consolidated loss for the whole of last year.

Sigurþóra Bergsdóttir, a municipal councillor for the Social Democratic Alliance, said the financial position had come as a surprise, although the minority had raised concerns for a long time.

She said the minority had repeatedly proposed raising the local income tax during budget discussions because it considered failing to do so irresponsible.

“The majority points to higher interest rates and other factors that have their explanations, but that does not change the fact that this loss falls on the municipality and that we have started relying on overdrafts,” Sigurþóra said.

She said she was very concerned about the situation and expected the municipality would probably need to borrow money. She also said she did not believe the mayor was able to manage the task.

Þór said Seltjarnarnes has the fifth-lowest local income tax rate in Iceland and that the majority might unfortunately have to “raise the admission price somewhat”.

“This is simply a decision for the majority. We still have to meet and conclude these matters, but this is being considered alongside everything else,” he said.

Responding to criticism from the minority, Þór said its members sat on the municipal council’s executive committee and had therefore been aware of the situation for as long as the majority.

He pointed to costs the municipality could not control, including pension liabilities and financial expenses. In his statement to the council, he said the municipality’s unaudited six-month results showed a difficult position after the first half of the year.

Financial expenses amounted to 242.5 million krónur, or nearly 60 per cent of the period’s loss. The statement said high inflation had had the greatest impact on the results.