Opposition to resource tax on geothermal heating

Minority leaders on Reykjavík City Council have expressed serious doubts about Prime Minister Kristrún Frostadóttir’s recent proposal to impose a resource tax on the use of natural resources for home heating and electricity. The idea was introduced at a public meeting in Ísafjörður last week.

“These proposals from the Social Democratic Alliance are deeply misguided and yet another attempt to raise taxes on households,” said Hildur Björnsdóttir, leader of the Independence Party in Reykjavík City Council.

“There’s no question that a special resource tax on geothermal energy will lead to increased costs for both heating and electricity. Residents are already burdened with an unfavorable tax environment under the Social Democrats’ leadership—and this would only make things worse.”

"Shocked by the proposal"

Einar Þorsteinsson, leader of the Progressive Party in the council, voiced similar concerns.

“I am shocked by Kristrún Frostadóttir’s proposal to impose a special resource tax on residents of the capital area. It reminds me of the previous Jóhanna government, which wanted to tax everything and everyone. Affordable geothermal heating has long been a fundamental quality of life that we collectively own, and people have reacted very negatively whenever prices have increased.”

He added that public reaction would likely be strong:

“I expect this new Social Democrat tax proposal will be extremely unpopular, and we will fight it.”

Björnsdóttir also pointed out that stagnation in energy development has contributed to rising electricity prices. She said it is essential to resist any tax hikes that could further increase household costs.

“Over the past decade, the tax burden on working families in Reykjavík has increased by an average of ISK 700,000 annually, in real terms, solely due to municipal taxation. This trend must be reversed—it’s long overdue to reduce taxes and fees in Reykjavík.”