High earners benefit most from Danish tax plan: thinktank

Taxpayers in Denmark who earn over 600,000 kroner (81,000 euros) annually will benefit most from three major agreements made between the government and conservative allies in recent months, according to an analysis.

High earners benefit most from Danish tax plan: thinktank
File photo: Brian Bergmann/Scanpix Denmark

The conclusion is based on calculations by thinktanks Cepos, reports financial newspaper Børsen.

Since November, the coalition government has reached agreement with parliamentary ally the Danish People's Party for a business stimulus package, new budget and, most recently, tax reforms.

The three deals provide tax cuts totalling around eight billion kroner (1.1 billion euros).

According to Cepos' calculations, a company director who earns 1.2 million kroner (160,000 euros) annually will benefit most from the three economic packages in terms of raw savings.

The hypothetical director would save 10,625 kroner annually, while an employee with an annual wage of 600,000 kroner (80,000 euros) could see tax savings of 9,550 kroner.

Lower earners will also save, but to smaller extents, according to the analysis conducted by Cepos.

People working in industries within the LO (Landsorganisation) trade union representative body, which includes public servants, construction workers, tradespeople and others, stand to save around 6,800 kroner; while low-salaried members of the HK trade and white collar union, Denmark's second largest trade union, will save 6,550 kroner (880 euros), according to the report.

“It is great that everyone will benefit from an eight-billion kroner tax reduction. But the tax cuts should be significantly larger, and my criticism is also related to an excessive amount of stopgap measures being prioritised over actual structural improvements to the tax system. That prioritisation means that far too little will be gained for the money,” Cepos head economist Mads Lundby Hansen told Børsen.

Finance Minister Kristian Jensen and Danish People's Party tax spokesperson Dennis Flydtkjær both told Børsen that they do not accept Cepos' calculations.

READ ALSO: Foreigners will help pay for Denmark's tax cuts as welfare rules tightened

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