Government looks to trim fat tax

The plan to drop unpopular levies is meeting resistance

August 28th, 2012 12:35 pm| by admin

The much-maligned 'sin' levies have been accused of costing jobs and driving shoppers across the border to stock up. The government says it wants to put an end to the bad taste left in consumer's mouths by the taxes by simply dropping them.


The missing funds would be made up by raising the bundskat, or bottom tax rate, to 4.64 percent, an increase of 0.3 percent to any income earned above the personal allowance of 42,900 kroner per year after deducting the amount of gross taxes already paid.


"We have previously proposed raising the bundskat rate and it is still a possibility," the tax minister, Thor Möger Pedersen (Socialistisk Folkeparti), told Børsen newspaper. "We are ready to discuss the financing with those parties that are willing to take responsibility for removing the fat and sugar levies." 


Along with the increase in personal taxes, the government would cut economic aid to business by two billion kroner and drop an energy renovation subsidy. The plan has already met with criticism from some parties.


"We cannot support a plan that helps businesses on one hand while cutting support at the same time," Konservative financial spokesperson Mike Legarth told Børsen. Legarth said his party is also opposed to the tax increase. 


Peter Christensen, Venstre's financial spokesperson, also disapproved of the government's methods.


"It is strange that they say they will lower personal taxes one day and then say they need to raise them two days later," said Cristensen. "If the government wants to get rid of these taxes, they have to find alternative ways to make up the difference."


Business support groups Dansk Industri (DI) and the Danish Chamber of Commerce have both been vocal opponents of the fat and sugar taxes, but they are not happy with the government's current idea to cut the taxes by dropping support for business and raising income taxes. 


"It is unacceptable to cut these taxes and then replace them with a higher personal tax rate," DI's Jens Klarskov told Børsen.


The proposal to remove fat and sugar taxes was not part of the budget that was presented on Monday. 

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