Everybody will be paying more into local and national coffers in Iceland in 2018, especially the working class. Finance taxes were raised, however, and there may be increased taxation on Iceland’s fishing giants, too.
RÚV reports on a number of the changes in store for 2018. Petrol tax will go up by about 2%, increasing the per-litre price of petrol and diesel by 5 ISK. In addition, the carbon tax on fuel will increase by 50%.
While this is intended to encourage people to explore alternative forms of transportation and use their cars less, the capital area bus company Strætó has increased their single fares to 460 ISK, with a monthly bus card now costing 12,300 ISK. Meanwhile, there will continue to be no VAT on hydrogen-powered and electric cars, although parking fees will go up by 36%.
The City of Reykjavík instituted a number of fee increases as well. The cost of an eight-hour day at playschool went up by nearly 600 ISK, to 25,320 ISK; hot food in primary school went up by about 350 ISK to 9,520 ISK per month; and a five-day stay at an after school centre went up by about 250 ISK to 13,413 ISK.
While all of these increases will likely hit working class Icelanders harder than higher income-earning Icelanders, there were some changes to the tax code which may offset these costs. The personal tax credit was increased by 1.9% and the tax-free income level was raised to 152,000 ISK, when the 4% pension fund fee is taken into consideration. At the same time, the finance tax was raised from 20% to 22%. Further, Prime Minister Katrín Jakobsdóttir told reporters that taxes on Iceland’s fishing giants may also be raised.
Tax on alcohol and tobacco will go up by 2% as well, giving people even more reason to give up these vices.