Guðlaugur Þór accuses PM of breaking tax pledge

Independence Party MP Guðlaugur Þór Þórðarson accused Prime Minister Kristrún Frostadóttir of breaking a promise not to raise taxes on ordinary working people, mbl.is reported. He said the government had raised taxes by 60 billion krónur over two years.

Frostadóttir said the government was working to put public finances back on track, creating the conditions for lower interest rates and inflation. She said it was seeking additional revenue from banks, the tourism sector and natural resources.

The exchange took place during an unscheduled question session in Alþingi, Iceland’s parliament. Guðlaugur referred to Frostadóttir’s pre-election pledge and pointed to increases in income tax, changes to child benefits and interest benefits, and fixed-amount charges.

“Is it not ordinary people who pay these taxes? Is it not working people who pay these taxes? If this is not ordinary people and this is not working people, then who are these people?” Guðlaugur asked.

He also asked whether the government’s measures could have contributed to higher interest rates and whether it planned to abolish the Fiscal Council after not following its recommendations on the financial plan.

Frostadóttir said the government was completing projects initiated by the previous administration. She specifically mentioned a kilometre charge, saying the previous government had planned to raise it by 7.5 billion krónur next year, while the current proposal involved a four-billion-króna increase.

She said the government was instead seeking revenue from banks, tourism and fishing, including through a fishing fee. She said this was consistent with the Social Democratic Alliance’s policy of obtaining fair revenue from the country’s natural resources.

Frostadóttir also said the state now paid about 170 billion krónur a year in interest benefits, compared with about 50 billion when the previous government took office roughly nine years ago.

“It does not work to keep everything at a minimum simply to have a huge hole in the state treasury for years and cause overheating, inflation and a major inflation and interest burden,” she said.

Guðlaugur said the prime minister had not answered his questions and accused her of being “completely lost in thick moorland fog.” He repeated his questions about income tax, child benefits and interest benefits, and asked why she had promised before the election not to raise taxes on working people.

“The honourable minister is speaking here as if she had just arrived,” Guðlaugur said, pointing out that Frostadóttir had served on the budget committee and was familiar with the issues.

He also said she could not act as if she knew nothing about the effects of the WOW air bankruptcy, the Covid-19 pandemic or volcanic activity on the Reykjanes Peninsula. He said she had still not answered why she had broken her promises.