“Taxes on households and businesses are being raised”

“Taxes on households and businesses are being raised.” That was Lilja Dögg Alfreðsdóttir's response to the government's budget proposal, presented by Finance Minister Daði Már Kristófersson.

The Progressive Party leader told mbl.is that a 5.2% increase in nominal charges was likely to keep inflation expectations elevated. She said the first reaction in the bond markets indicated that those expectations had deteriorated.

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Taxes on households and businesses are being raised. A 5.2% increase in nominal charges is likely to keep inflation expectations higher, and the first reactions in the bond markets were that inflation expectations had worsened.

Alfreðsdóttir said the government's key task should be to bring down inflation and interest rates, which she described as the public's wish. “Moving to a balanced budget, whatever the cost, may not be exactly what households in the country are asking for,” she said.

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Moving to a balanced budget, whatever the cost, may not be exactly what households in the country are asking for.

She said she was surprised that the government was proposing further increases in public charges instead of aligning its plans with the Central Bank's 2.5% inflation target. She pointed to higher university fees, increased primary healthcare charges and substantial tax increases on businesses.

The government has also proposed raising the mileage charge, which Alfreðsdóttir called a special tax on rural areas. She said the proposal ran counter to the Progressive Party's position, which has urged the government to adopt a clear policy on tariff increases to keep inflation expectations under control.

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This is contrary to what we in the Progressive Party have been advocating.