Some 350,000 Danes will no longer have to pay the top tax rate if the government manages to push through its plan to raise the bracket from 459,000 kroner a year and above.
The government looks poised to raise the top tax bracket to 750,000 kroner and above, and according to reports, it will have the backing of the majority of Parliament.
“It would be wise to do something about the top tax bracket,” the prime minister, Lars Løkke Rasmussen, told Børsen business newspaper. “It would really mean a lot to people with considerable, but not extravagant wages.”
According to the government, the move would help Danish companies retain their skilled employees who are considering taking jobs in countries where taxes are lower.
The Venstre government promised in its recent election campaign that it would look to reduce the top tax rate by 5 percent, but it is unlikely that such a move would be accepted by a majority of Parliament.
Socialdemokraterne and Dansk Folkeparti have categorically refused to back a reduction in the top tax rate, but they are said to be more likely to agree to raising the top tax bracket.
Just last week, a study by the business interest organisation Dansk Industri (DI) found that doing away with the top tax bracket altogether would increase the supply of labour by the equivalent of 16,000 people working full-time and boost the gross domestic product (GDP) by 15 billion kroner.