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2016 Budget Bill Introduced

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2016 Budget Bill Introduced

Minister of Finance Bjarni Benediktsson speaking at the Independence Party general meeting in 2013.

Photo: Geir Ólafsson.

Finance Minister Bjarni Benediktsson introduced the government’s budget bill in Harpa concert house today, Vísir reports.

The budget bill expects a budget surplus of ISK 15.3 billion ( USD 118.5 million, EUR 106 million) in 2016. Bjarni said the aim was to have a balanced budget the third year in a row and that it appeared the 2015 budget would have a larger surplus than expected, or ISK 21 billion (USD 163 million, EUR 145 million).

“Gross domestic product has been steadily increasing since 2011. If predictions are right, we are experiencing one of the longest periods of economic growth in modern Icelandic economic history.”

The minister said purchasing power has been steadily increasing and is now getting close to what it was in 2007. Inflation has been moderate, but will go up in the next two years. Unemployment has been steady, investment in industry on the rise, and “We see clear signs that household debt is going down.”

“A special emphasis will be placed on reducing national debt to reduce the cost of interest in the coming years.” Right now, the national debt stands at ISK 1,177 billion (USD 9.1 billion, EUR 8.1 billion). That amount could be drastically reduced, in Bjarni’s opinion, by using proceeds from the part of Landsbanki bank the government might sell.

The budget plans to allocate ISK 2.6 billion (UDS 20 million, EUR 18 million) toward housing issues, and that there will be lower tax on rent in order to give an incentive for long-term rent.

Allocations toward health care, education and public insurance will go up.

Tariffs on clothes and shoes will be suspended in the New Year. All other tariffs, except on “certain foods” will be suspended in 2017.

Income tax will go down in two phases, resulting in a lower (of two) tax rates of 22.5 percent in 2017.

Child support will continue to increase (a three percent increase). In addition, there is an increase of 9.4 percent planned for benefits for the elderly, disabled pensioners and the unemployed.

Allocations toward the health care sector will go up by ISK 1.6 billion (USD 12.4 million, EUR 11.1 million). Part of that amount will go toward completing the design of Landspítali hospital and toward the construction of a patient hotel.

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