Higher charges forecast to bring in 5 billion kronur less

Revenue from higher fishing fees, vehicle excise duties and a kilometre-based charge is forecast to fall nearly 5 billion kronur short of the 2026 budget estimate, mbl.is reports.

The draft budget for 2027 puts expected revenue from the charges at 13.4 billion kronur, compared with 18.4 billion projected in the 2026 budget. The shortfall is 4.997 billion kronur, or more than a quarter of the budget estimate.

Fishing fees were expected to bring in 16.089 billion kronur this year, but the latest forecast is 14.849 billion, a decline of 1.24 billion. Vehicle excise duties were forecast to raise 17.3 billion kronur; the new estimate is 13.85 billion, a difference of 3.45 billion. The kilometre-based charge was expected to bring in 37.057 billion kronur, but is now forecast to raise 36.75 billion, 307 million less.

The forecast revenues remain well below the government’s original estimates for the additional income from the increases: 7.6 billion kronur from fishing fees, 7.5 billion from vehicle excise duties and 3.3 billion from the kilometre-based charge.

Guðlaugur Þór Þórðarson, an MP for the Independence Party and a member of parliament’s budget committee, told Morgunblaðið that the government does not assess the effects of tax increases and assumes people will behave in the same way after a tax rise as before.

He cited vehicle excise duties as the clearest example, saying people had warned that raising them would reduce sales and that this was what happened. He also said the government’s plans for a new nature and infrastructure charge on tourism assume that the same number of people will travel the Golden Circle tourist route after the increase as before.

The Association of the Icelandic Travel Industry estimates that the tax measures proposed in next year’s budget will bring in 10.6 billion kronur. A new nature and infrastructure charge and a VAT increase on bathing lagoons are expected to account for about 9 billion of that total.

“Everyone other than the government can see that this will not happen. It is obvious that the 9 billion kronur these charges are expected to raise next year will not materialise, with corresponding effects on state revenues,” Guðlaugur Þór said.