The Confederation of Icelandic Labor Unions (ASÍ) expressed concerns that new tax increases go beyond that which was agreed upon in the so-called “stabilization agreement”.
According to Vísir, a statement from ASÍ reads in part that “it is important that taxes protect those earning the lowest incomes”. They warned especially against raising sales taxes, which they contend can have a significant effect on the cost of running a business, or a household. The union also drew a connection between increased taxes and growing unemployment.
However, it should be pointed out that Iceland still has the lowest taxes rates in Scandinavia, while having unemployment about as high as Sweden – the country with the highest tax rate in Scandinavia. Furthermore, Denmark – which also has higher taxes than Iceland – has a lower unemployment rate, at about 3%.
As the government struggles to balance the budget, it is finding itself trying to strike a balance between raising taxes, and making cuts in the social welfare system.