Commission recommends reducing income tax

The tax commission’s leaked report suggests reducing income tax, but also tax deductibles The government’s tax commission is ready to reduce income tax by 36 billion kroner, but property owners will be expected to finance 9 billion kroner of the...

The government’s tax commission is ready to reduce income tax by 36 billion kroner, but property owners will be expected to finance 9 billion kroner of the cut, according to information obtained by financial daily Børsen.

The prime minister assembled the tax commission last year to find a proposal for a tax system that would make it more attractive to find employment and remain in the labour market.

Property owners will face tougher times as tax relief on interest will be sharply reduced from the current 33 percent to 25 percent. The commission estimates that this will knock up to three percent off house prices nationwide.

It is also reported that the middle tax bracket of six percent, which is in addition to the 38 percent basic tax, be removed. The commission also recommends that the top tax bracket be decreased by 1.5 percent to 13.5 percent. The qualifying amount for the top tax bracket will be increased to 380,000 kroner, meaning more people will fall outside the highest tax rate.

The reduced income tax rates will come at a price, with many deductibles being severely reduced. These will include deductibles such as membership of unemployment funds, union fees and transport allowances.

Meanwhile, people will be rewarded for staying in the labour market, with personal and work tax deductibles being raised.

The business community will also help finance the new reforms as the commission recommends that increased energy and user charges will account for an extra 5.5 billion kroner in the state coffers.

The exact details of the commission’s report will not be fully known until they are published in two weeks time, but politicians have been coming out both in favour and against the introduction of a wealth tax.

Such a tax was last seen in 1995, with home owners paying 1 percent tax on the value of their total wealth if it came to more than 1.5 million kroner.

Deputy prime minister and leader of the conservative party, Lene Espersen, expressed her opposition to re-introducing the wealth tax.

‘We don’t think that it’s fair that people who have already paid tax should pay further tax on their savings.’

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