Danish government confirms delay to 2022 budget

Denmark’s budget for 2022 is subject to a delay of around two weeks, the Ministry of Finance said on Friday.

Danish finance minister Nicolai Wammen. The 2022 budget has been delayed amid ongoing negotiations.
Danish finance minister Nicolai Wammen. The 2022 budget has been delayed amid ongoing negotiations. Photo: Nils Meilvang/Ritzau Scanpix

The delay was confirmed in a note from Finance Minister Nicolai Wammen to the Speaker of the parliament.

The government’s plan to see the budget passed in parliament in a final vote on December 15th or 16th will not come to pass, the minister admitted in the note.

“On behalf of the government I must therefore request a new date for the third [standard voting procedure, ed.] treatment – likely in week 51 [commencing December 20th, ed.],” the minister wrote.

In fact, the government is yet to table a new budget at all, broadcaster DR writes. Negotiations are ongoing between the minority Social Democrat administration and its primary parliamentary allies, the three left wing parties Social Liberal, Socialist People’s Party (SF) and Red Green Alliance.

Denmark’s constitution requires a new budget to voted through parliament by the new year.

When combined with Denmark’s tradition of parliamentary agreements, often across the political divide, this means the budget normally contains funding for proposals and measures desired by parties outside the government. 

The process starts with the government making a “budget proposal”, before entering talks with all the other political parties during which time the budget can change quite substantially. 

The parliament normally votes through the next year’s budget in December, but proposals are normally tabled in early autumn – the original proposal for 2022 was presented at the end of August

If the government is unable to secure a majority for a new budget, a temporary spending law is tabled.

READ ALSO: What was in the Danish government’s 2022 budget proposal?

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Denmark scraps popular tax deduction for home improvements

A tax deduction for home improvements, the “håndværkerfradrag”, is to be scrapped in 2022 after parties agreed to end it in next year’s budget.

A popular tax subsidy for home improvements, the
A popular tax subsidy for home improvements, the "håndværkerfradrag", will end in Denmark on April 1st 2022. Photo: Signe Goldmann/Ritzau Scanpix

The government, along with its left wing allies Red Green Alliance, Social Liberals and Socialist People’s Party; and minor parties Alternative and the Christian Democrats, presented the 2022 budget on Monday, including an agreement to drop the home building subsidy.

Sofie Carsten Nielsen, leader of the Social Liberals, said “we are dropping the building subsidy that has ignited the already overheated housing and construction market”.

READ ALSO: Four ways to (legally) lower your tax bill in Denmark

The tax deduction will be removed from April 1st next year. Other tax deductions that can be applied for home services, including cleaning and childcare, are retained.

Tax subsidies for people who hire services in their homes, termed boligjobordningen, were broadened last year as part of government measures to support the economy during the coronavirus crisis.

The provision allowed for a higher tax deduction for the encompassed home services.

Demand for builders has since increased so dramatically that supply can no longer meet demand. As such, the parties behind the budget deal reason that the deduction is no longer needed.

Additionally, the Danish central bank, Nationalbanken, has warned that high demand could contribute to an overheating of the housing market.

Although the deduction was adjusted five years ago to favour green home improvements, the government’s allied parties still maintained they wanted to scrap it.

Nielsen said on Monday that the deduction has put Denmark’s building trade under strain.

“This is an economically responsible budget which also contains huge green decisions,” the Social Liberal leader said.

Finance Minister Nicolai Wammen said that the deduction would remain applicable to other trades, including cleaning, in order to prevent cash-in-hand arrangements.

“The biggest challenge we have in regard to the Danish service industry is in building and extensions. That’s why we are revoking the building element of the (subsidies),” Wammen said.

“But we are very concerned with keeping down cash-in-hand work in the service sector,” he added.