Copenhagen has too much money

September 6th, 2012

This article is more than 12 years old.

The city’s politicians must now decide whether to save its surplus of 2.4 billion kroner or cut taxes to stimulate growth

Every month 1,000 people move to Copenhagen seeking opportunity and enriching the city’s purse in the process.

As a result, the city has managed to amass 2.4 billion kroner more than it is allowed to spend according to the deal the country’s 98 councils made with the government this year.

The deal limited council’s expenditure on public services, salaries and facilities. As the city has already allocated its budget for 2013, the city’s politicians have to decide whether to save the surplus money or use it to reduce taxes.

“I am of the opinion that our purpose in the world is not to run a bank,” Rasmus Jarlov, a Konservative MP, told Berlingske newspaper. “If we can’t use the money, then we should reduce taxes.”

That view was shared by Copenhagen’s deputy mayor for culture, Pia Allerselv (Venstre), who thinks the city should sink income tax by 0.2 percent and reduce real estate taxes on businesses by 25 percent to stimulate growth.

“There is more money in the till this year than we can spend,” Allerslev told Berlingske. “And there is more money than we could possible use on facilities in 2014 and 2015 even if there wasn’t a limit. Copenhagen is a rich city that can afford to build, renovate and give tax relief.”

But mayor Frank Jensen (Socialdemokraterne) rejected tax relief and argued that the city needs money to cope with the pressure that its rising population will place on the services it provides.

“Copenhagen is facing a number of very big challenges that require big investments, so there is plenty to save for,” Jensen told Berlingske. “Tax relief undermines our economic flexibility this year and in the coming years and undermines the opportunity to have a healthy economy. I think that is irresponsible. We should not repeat the sins of our past.”


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