The director of retail giant Hagar believes the Icelandic government taxes shops too much, and is completely out of touch with European tax systems.
Finnur Árnason, the director of Hagar – which owns, among other companies, Bónus, Hagkaup and Top Shop – told Vísir that the Icelandic government has gone too far with regard to how tax is levied.
He points out that in addition to an import charge placed on items, there is also a VAT of 25.5%. “We are competing with Britain,” he says. “Where there is no VAT on children’s clothes. In the Nordic countries, people are repaid the VAT, and in the US, sales tax is between 6% and 8%.” Finnur adds that Icelanders pay double on import tariffs for goods from outside the European Union, while the tariff on goods from within the EU is 15%.
For this reason, he believes that the sale of clothing has steadily decreased since the economic crash of 2008 – with less disposable income and higher taxes, people allow themselves fewer luxuries.