BYKO chief warns VAT refund cut would raise housing costs

Cutting the VAT refund on tradespeople’s work on homes would amount to a tax increase of 1.1 million to 1.3 million Icelandic krónur for a 100-square-metre home, BYKO chief executive Sigurður Brynjar Pálsson says, according to mbl.is.

In an opinion piece published in Morgunblaðið, Pálsson criticises government plans to reduce the refund from 35% to 20%. He says the state’s expected revenue from the change is overstated and warns it could lead to a downturn, more undeclared work and higher housing prices.

He argues instead for a 100% refund.