Despite a growing public outcry over a proposed raise in taxes that the government plans to put into action, Iceland still has the lowest tax rates of any of the Nordic countries.
Professor of social sciences Stefán Ólafsson told RÚV that even if all the proposed tax changes are passed, the highest tax rate will still be significantly lower than the highest taxes of any of the Nordic countries. He added that Iceland has always paid less into the health and welfare system than other Nordic countries as well. Sweden, for example, pays about 30% of its revenues into this area, while Iceland pays 20%.
In fact, based on OECD data from 2007, Iceland’s income tax rate is on average 36,72%, while its corporate tax rate is even lower, at 18%. By contrast, the second-lowest taxing Nordic country, Norway, has income tax at 47.8% and corporate tax at 28%. The highest, Sweden, shows income tax over 50%, and corporate tax at 28%. The changes proposed to Iceland’s tax code do not even approach Norway’s taxation levels.
It should be kept in mind, however, that percentages alone do not reflect the real tax burden, as the strength of the country’s currency, among other factors, also plays a significant role in this.