Flat tax proposal dumped

Tax Minister Kristian Jensen rejects the idea of a flat tax, as it would mean that low-income workers would pay for those with the highest incomes

Hong Kong may have done it, the Channel Islands may have done it, but a flat income tax is not a viable solution for Denmark, Tax Minister Kristian Jensen said on Tuesday.

Jensen said a flat tax would mean that those with the lowest incomes would have to pay for those with the highest incomes, according to national radio news channel DR.

His comments left the Conservative People's Party, government coalition partner of Jensen's Liberal Party, as the only party in favour of the idea of implementing a single tax rate for all citizens.

On Tuesday, liberal think tank Cepos held a conference on flat tax, where its supporters advocated the idea, which is said to be gaining ground across the world, especially in eastern Europe.

Cepos proposes that in the course of the next seven years, a common 43-percent marginal tax be imposed on all Danes, without touching the tax relieves that already exist.

Jensen, who participated in the Cepos conference, said he could see many of the benefits of flat taxation. It would be easy to understand and administer, but he felt that it included two large problems, which prevented him from supporting the idea.

'A classic flat tax in Denmark would mean that 75 percent of Danes would pay more in taxes, while only 25 percent would pay less. That would mean redistribution from those with the lowest incomes to those with the highest income. We can't support that,' Jensen said.

He added that the other problem was that future governments could easily raise the flat tax without the nation noticing it. In addition, he did not support Cepos' proposal that the DKK 28-billion bill for the flat tax should be footed by freezing social benefit payments and public employee numbers at their current levels.

'I don't have anything against flat tax,' Jensen said. 'But I have something against Cepos' way of funding it. We have promised our voters that there should be room for investment in the public sector, and we will therefore not remove the growth that finances it.'

The opposition Socialist People's Party said they found the flat tax idea 'raving mad', and the Social Democrats did not prove too positive, either.

'I still haven't seen a proposal that is fair and provides responsible distribution,' said the party's tax spokesman Rene Skau Bjørnsson. 'I don't think very highly of this club of high wage earners who demand tax cuts for themselves by taking money from lower wage earners.'

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