Unions challenge finance minister over tax rises and inflation

VR, LÍV and professional associations have criticised Finance Minister Daði Már Kristófersson’s remarks on the cost of tackling inflation, in a statement reported by mbl.is. The groups said his comments did not reflect the pressure facing workers and households.

In an interview with Vísir, Kristófersson described criticism of the government’s tax and fee increases as a demand for short-term gains at the expense of society’s long-term interests. The groups said households had faced high inflation, high interest rates and rapidly rising housing costs in recent years, while wage increases had generally failed to keep pace with prices.

The minister acknowledged in the interview that the moderate wage agreements reached in 2024 had not brought the expected easing of inflation. The groups pointed out that the government nevertheless plans to raise state charges by 5.2%, well above the Central Bank’s 2.5% inflation target. They noted that the minister had said the increases were intended in part to cool the economy.

“The government calls for restraint while raising taxes and fees itself,” the statement said. It accused the government of seeking more revenue from the public and contributing to inflation while leaving businesses untouched. The groups also said the latest inflation figures showed goods prices had risen despite a rapid strengthening of the króna, and argued that the finance minister’s decision to raise value-added tax on fuel again had played a significant role.

Kristófersson said in the interview that the solution to inflation would always involve some pain, adding that if any country could withstand such pain, it was Iceland.

“But it is not ‘Iceland’ that pays the bill. It is people,” the groups said, pointing to households facing higher interest rates, taxes and fees, and workers seeing their purchasing power decline. They called on the government to show through its actions that it supports households and will help ensure the wage agreements remain viable.