Treasury revenue 79 billion ISK more than this year

In the fiscal budget proposal for 2023 the treasury revenues are estimated to be 79 billion ISK more than in the budget for 2022. Bjarni Benediktsson Minister of Finance and Economic Affairs introduced the fiscal budget proposal this morning.

In the announcement from the Ministry it is stated that the revenue of the treasure increase between the years 2022 and 2023. The explanation is favourable economic development, less unemployment and proposed measures against inflation and overheating.The increase will be seen in value-added tax, investment tax, personal income tax, and payroll tax, among other things.

"In coming years, the biggest project for the Treasury on the revenues side will be a comprehensive review of public levies on motor vehicles and fuel. The State’s revenues from motor vehicles and fuel have contracted sharply as progress has been made in transitioning to more fuel-efficient and environment-friendly motor vehicles. New solutions must therefore be found so that the country’s transportation system can be developed and maintained effectively", is stated in the announcement.

In the announcement it is pointed out that an ever growing number of vehicle owners pay very little for their use of the road system, because treasury revenues from eco-friendly carsare very limited. The goal is to develop a tax system that is more usage based and changes to that effect will be madein 2023 and will be manifested in motor vehicle taxes, excise taxes and emission limits to begin with.

Fighting overheating and inflation

"Expenditure growth is assumed to be modest in 2023, with GDP growth used to strengthen the fiscal position and work against overheating and inflation. Total Treasury expenditure is estimated at ISK 1,296.5bn in 2023, an increase of ISK 78.5bn relative to the 2022 National Budget.

Spending on social, housing, and insurance affairs will increase the most, but healthcare remains the largest expenditure item by far, at nearly ISK 320bn. Allocations to environmental affairs also increase markedly relative to the prior year, including measures for carbon sequestration and greenhouse gas emissions reduction and measures to improve the condition of tourist destinations located within nature conservation areas."

Purchasing power increases

In the announcement it is stated that real wages have never been more and monthly income per capita has increased by 60,000 ISK in excess of inflation from 2016.

"Purchasing power has therefore grown by 22% in the interim, and this improvement in living standards has been protected in spite of the rise in inflation. Real wages among low-paid workers who are fully employed have risen more than real wages among high-income workers during the period."

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