Mark Flanagan, the International Monetary Fund (IMF) representative to Iceland, advised against a tax plan devised by members of the Independence Party.
The conservatives suggest that instead of raising taxes, that taxes instead be withdrawn from private pension funds each time salaries deposit into them. In this way, they say, the government can expect to save 115 billion ISK on a national and a municipal level in the next year, and could be used to replace raising taxes.
Vísir reports that Flanagan advises strongly against this idea.
Speaking to reporters, he explained that while the idea may give the appearance of increasing available funds, all it actually does is delay the inevitable. Eventually, the money taken out of the pensions will need to be replaced. All the conservative measure does is make the numbers look good in the short term, without fixing the nation’s serious economic problems in the long term.
The Independence Party, which had been in power in both the government and the Central Bank during the time leading up to and including the bank collapse, had ignored warnings as early as 2005 from finance analysts such as Standard and Poor’s that the economy was overheating. After being driven from power, they are now in the opposition, and are vehemently critical of the current leftist government’s ideas on how to repair the economy that the conservatives effectively destroyed.
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