Prime Minister announces tough measures for deficit-free budget by 2027
Prime Minister Kristrún Frostadóttir. mbl.is/Eggert Jóhannesson
Prime Minister Kristrún Frostadóttir stated yesterday that achieving the government's goal of a balanced budget by 2027 will require "difficult measures on both the expenditure and revenue sides" of the treasury.
Her comments came during an impromptu question session in Alþingi, where Independence Party MP Áslaug Arna Sigurbjörnsdóttir pressed the Prime Minister on potential future tax increases—particularly concerning the tourism industry.
Tax increases raise concerns
Sigurbjörnsdóttir opened her remarks by criticizing the government for going back on its pre-election pledge not to raise taxes on ordinary citizens.
“The esteemed government, which promised not to raise taxes on ordinary people in the run-up to the elections, is already operating in high tax-increase gear,” she said. “These increases were supposed to be calm, calculated, and not impact the general public—but little of that promise remains.”
Independence Party MP Áslaug Arna Sigurbjörnsdóttir pressed the Prime Minister on potential future tax increases. mbl.is/Eggert Jóhannesson
She questioned whether the recent tax hikes were just the beginning. “Which sector is next? Tourism? Is it the so-called 'unusual people'? What other tax increases does the government have up its sleeve?”
Prime Minister deflects on tourism taxes
In her response, Prime Minister Frostadóttir referred to the government's widely discussed proposal on fishing fees, suggesting that this may have been the focus of Sigurbjörnsdóttir's concerns.
She argued that the fishing fee is not a traditional tax but refrained from addressing whether new taxes on tourism or other sectors are being considered.
Sigurbjörnsdóttir, unsatisfied with the response, pressed again. She also criticized what she viewed as hypocrisy within the government, noting that ministers who previously voiced concerns over high interest rates are now pursuing policies that might obstruct interest rate cuts.
"Difficult actions" ahead
Frostadóttir countered by accusing the previous government of burdening ordinary citizens with inflationary pressures and fiscal imbalances. She emphasized that the current administration’s commitment to balancing the budget by 2027 reflects its focus on economic responsibility.
“Achieving this goal will demand difficult decisions on both the spending and revenue fronts,” she said, signaling that both cuts and further increases may be in store.
