Unions disappointed with government's tax proposals

Minister of Finance Bjarni Benediktsson presented the government's tax and wage proposals last night.  The proposals have been strongly criticised by the four unions leading the current wage negotiatons. 

"The four unions which have led the current wage negotiations, VR, Efling, VLFA and VLFGrv, declare their anger and disappointment with the government’s proposals, announced in a meeting with ASÍ’s president and vice-presidents today, February 19."

The government’s contribution to the debate involved a significant change to the Icelandic tax system wherein the lowest tax level would be newly set at a monthly wage of ISK 325,000 [$2,718; €2,395] a month. The taxation on this level would be 32.94%.  The tax-free limit would be set at ISK 159.174 a month, taking into account a 4% pension contribution.

Bjarni’s presentation explained that the limit for both the first and second tax levels would be ISK 325,000 in order to maximize, he said, the benefits for low-income groups, as well as people with disabilities and the elderly. Per the second level, however, those who earn less than ISK 927,087 [$7,746; €6,830] a month would be taxed at 36.94% while those who make more than that would be taxed at 46.24%.

The statement from the four unions is as follows: 

The four unions which have led the current wage negotiations, VR, Efling, VLFA and VLFGrv, declare their anger and disappointment with the government’s proposals, announced in a meeting with ASÍ’s president and vice-presidents today, February 19.

Negotiations have been in a critical position after the SA business association made an offer last week which would have led to reduced purchasing power for large groups of workers. The SA in turn rejected a fair counteroffer by the four unions.

There was some hope that the government’s input could rekindle the negotiations process. It is clear, however, that the government’s proposals destroy that hope. Meetings will be held in the unions in the next couple of days and on Thursday the union leaders will meet the SA at the state mediator.

The four unions stand united and steadfast in their demand that workers should be able to live off their wages and that the government should make long overdue systemic changes in the direction of justice.

Sólveig Anna Jónsdóttir, director of the Efling union. Haraldur Jónasson/Hari