Denmark wins highest tax competition

Denmark has always had an infamous reputation for its high income tax rates, but it has only recently taken the crown as the world's leader in that category, reported financial daily Børsen.

Sweden has lowered its income tax rate significantly over the past few years, and although Denmark has also lowered its taxes somewhat, it has been hard pressed to keep up with its next-door neighbour. Denmark's current income tax average is 47.4 percent, while the Swedes are slightly lower at around 46 percent.

But that Denmark is the new income tax leader in Scandinavia is not exactly breaking news. New figures from Statistics Denmark indicate that the country was already the world income tax leader a few years back. The organisation only now recalculated the numbers from the previous three years, which showed that in 2004 Denmark had begun to overtake the Swedes. In 2005 its 51 percent income rate was well above the Swedish rate of 49.5 percent.

Business advocates are taking the news as expected and calling for the government to implement further tax breaks. But both the government ally Danish People's Party and opposition Socialist People's Party are in agreement that the income tax rate should remain as is.

Steen Leth Jeppesen, president of the National Taxpayers Association, would like to see lower income taxes. But not, he said, if the government continues its policy of raising taxes in other areas such as energy, water, excise duties, and on property and vehicles, where Denmark is also at or near the top of the world tax scale.

'We've seen a lot of tax reform in recent years and the results are scary,' said Jeppesen. 'We already pay high taxes in so many areas that we can't compete internationally in any of them.'

But Socialist People's Party tax spokesperson, Jesper Petersen, said the new figures are probably more damaging for the Swedes than for Danes.

'Tax breaks in Denmark, especially to the rich, have led to a lower level of social welfare,' said Petersen. 'It's taken DKK 20 billion away that could have been used on schools and other important areas. It makes me worry about the Swedish social welfare system.' (RC)

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