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Budget Bill in Nutshell

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Budget Bill in Nutshell

Icelandic money

Photo: Geir Ólafsson.

The Icelandic government’s budget bill was presented in Alþingi, the Icelandic parliament, yesterday when Alþingi reconvened. It was presented by Finance Minister Bjarni Benediktsson, but since no government has yet been formed following the October 29 election, the coalition of the Independence Party and the Progressive Party only serves as a caretaker government, which no longer enjoys majority in parliament. It’s, therefore, entirely up to Alþingi as a whole to pass the budget bill.

When presenting the bill, Bjarni emphasized the importance of restraint in spending in response to the economic expansion the country is experiencing and the boom in tourism. This year’s budget bill, which for the fourth year in a row will be balanced, assumes a ISK 28.5 billion surplus, Fréttablaðið reports.

Total treasury expenses will be ISK 743 billion (USD 6.7 billion, EUR 6.2 billion), which represents a ISK 62 billion (USD 560 million, EUR 521 million), increase compared to last year. The state treasury’s interest expenses are expected to decrease by ISK 10 billion in the coming year. National insurance is allocated a ISK 11.1 billion increase in funding, while funding for tourism will increase by ISK 780 million. Landspítali National University Hospital is allocated an increase of ISK 500 million for the purchase of equipment. Funding for education and culture is expected to increase by ISK 2.5 billion. The state treasury expects its income from tariffs to diminish by ISK 3 billion.

Funds for unexpected expenses will increase by ISK 7 billion (USD 63 million, EUR 59 million).

Health care funding will increase by ISK 7.3 billion (USD 66 million, EUR 61 million), to be allocated as follows:

Landspítali National University Hospital will receive an increase of ISK 4 billion in funding, or a total of ISK 59 billion, while the construction of a new Landspítali is allocated ISK 1.5 billion. Akureyri Hospital is allocated an extra ISK 500 million (a total of ISK 7.5 billion), while Primary Health Care gets ISK 2.1 billion extra (a total of ISK 21.7 billion). Dentistry is allocated ISK 3 billion and institutions for the elderly get ISK 3.9 billion (up from ISK 1.8 billion). Funding for medication will be ISK 13.5 billion (down from ISK 14.1 billion).

The positive effects for the taxpayer include that benefits for the elderly and disabled will be up by 7.5 percent, and maximum monthly payments for those on parental leave increase from ISK 370,000 to ISK 500,000 (USD 4,500, EUR 4,200). Tariffs on all but food and beverages will be canceled. Tax on rental income will be 10 percent instead of the current 14 percent. Child benefits increase by 3 percent. A temporary increase in interest relief will be extended by a year. The lower tax bracket will be reduced from 22.68 percent 22.5 percent.

The taxpayer’s increased expenses include the following: Church tax will be ISK 920 a month (up from ISK 898). The price of a passport will go up by 20 percent. Taxes on alcohol and tobacco will increase by 2.5 percent beyond inflation. A radio fee will go up by 2.2 percent. Tax on gas and diesel increases by 2.5 percent beyond inflation and automobile tax goes up by 2.5 percent. Fees for a project fund for the elderly go up by 4 percent.

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