Labour groups condemn finance minister’s remarks on households

VR, LÍV and professional associations have criticised Finance Minister Daði Már Kristófersson’s comments on tax increases, saying they disregard the pressure facing households, mbl.is reported.

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 organisations said that view did not reflect the reality for wage earners, whose households have faced high inflation, high interest rates and rising housing costs in recent years. They added that pay rises for many workers had not kept pace with prices.

The minister acknowledged in the interview that the moderate wage agreements reached in 2024 had not brought about the intended fall in inflation. The organisations noted that the government nevertheless plans to raise state fees by 5.2%, well above the Central Bank’s 2.5% inflation target. The minister has said the increases are intended in part to cool the economy.

“The government calls for restraint while raising taxes and fees itself,” the groups said in a statement. They argued that higher charges take money from the public and contribute to inflation, while businesses are left untouched. They also pointed to rising goods prices despite the króna’s rapid strengthening, and said the renewed increase in value-added tax on fuel was a significant factor.

Kristófersson said in the interview that tackling inflation would always involve some pain, and that if any country could withstand such pain, it was Iceland. The organisations responded that it was households, not “Iceland”, that paid the bill through higher interest, taxes and fees, while seeing their purchasing power erode.

VR, LÍV and the professional associations called on the government to show through its actions that it supports households and will help ensure the conditions of wage agreements hold. They said this could not be achieved by increasing charges and then accusing critics of putting short-term interests ahead of society’s.