Strong Protests Against Increased Taxation

The Association of Financial Service Companies (SFF) has issued a strong rebuke of the government's proposed tax hikes on the financial sector, as detailed in the financial plan for 2027-2031. The SFF argues that these plans are not only surprising but also come after a period where financial firms have already been subjected to significant and burdensome specific levies, higher capital requirements, and stricter reserve obligations compared to their international counterparts.

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Væri nær að vinda ofan af sköttum

Central to the SFF's criticism is the complete lack of prior consultation with the association before these proposals were put forth. This has left the SFF in the dark regarding the specifics of the planned increases, including their nature, implementation, duration, and target. The association points out that Icelandic financial firms already grapple with a special tax on debt, a financial services tax on profits, and a payroll tax, in addition to supervisory fees from the Central Bank of Iceland and charges for the Debtors' Ombudsman's office. This cumulative tax and fee environment, the SFF contends, is far more onerous than that faced by most other industries.

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Í umsögninni er sérstaklega gagnrýnt að ekkert samráð hafi verið haft við SFF áður en áformin voru sett fram.

Furthermore, the SFF highlights the recent increase in banks' non-interest-bearing reserve requirement from 1% to 3% in 2023 and 2024. While not formally a tax, this measure forces financial institutions to hold funds with the Central Bank without earning interest, amounting to an estimated loss of 8 billion Icelandic krónur annually in lost interest income for lenders. The association warns that such uncertainty and unpredictable tax changes could deter foreign investors, disrupt financing for financial companies, and ultimately affect the availability and cost of credit for households and businesses.

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SFF segja þetta nema um átta milljörðum króna á ári í töpuðum vaxtatekjum fyrir lánveitendur.

The SFF emphasizes that the burden of these taxes is not solely borne by the companies themselves. Given that the public is a major shareholder in the banking system, directly and indirectly through pension funds and the state treasury, a portion of any increased tax burden will inevitably fall upon the general populace. The association is calling for further dialogue with the government before any decisions are made, arguing that the proposed tax hikes contradict the government's stated goals of simplifying regulations, enhancing competitiveness, attracting foreign investment, and fostering economic growth.

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