Which Danish municipalities are raising taxes and what do changes mean for other areas?
Some 13 municipalities across Denmark are to raise municipal tax next year, but the changes could also affect people who live in other parts of the country.
When 13 Danish municipalities put taxes up next year, it is not only people who live in the relevant local authorities who could be affected.
Taxes can be raised or cut by municipalities each year. But a higher rate of tax at individual municipalities cuts into a subsidy all municipalities receive from the state.
The subsidy, called bloktilskud in Danish, is reduced by an amount equal to that raised by the higher taxes.
Municipality tax (kommuneskat) forms around 25 percent of the overall income tax in Denmark, and is the personal income tax which covers municipal services.
The amount paid by individuals is dependent on the municipality in which they live and municipalities generally decide their own rates within limits set by the government. As a result, the municipal tax rate can range between about 22 and 27 percent depending on address.
Municipal tax is added to two other basic taxes, AM-bidrag and bundskat, as well as topskat for high earners, to calculate an individual’s overall income tax payment.
READ ALSO: Does Denmark really have the highest tax in the world?
The municipalities which have decided to raise taxes are: Frederiksberg (1.1 percent), Tårnby (1 percent), Vordingborg (0.6 percent), Rebild (0.5 percent), Herning (0.5 percent), Slagelse (0.5 percent), Horsens (0.3 percent), Aalborg (0.2 percent), Gentofte (0.17 percent), Rudersdal (0.15 percent), Fanø (0.11 percent) Greve (0,1 percent), Solrød (0.09 percent).
Copenhagen Municipality is reducing its tax however, by 0.1 percent.
The decision by individual municipalities to raise taxes has received criticism elsewhere because the national budget laws mean that raised taxes in some municipalities can affect budgets in others, as a result of the recalculation of the “block” municipal state subsidy.
“It’s a completely skewed system,” the mayor of Langeland, Tonni Hansen, told broadcaster DR.
“Langeland Municipality is one of the most economically challenged municipalities in all of Denmark. And now residents of Langeland have to help finance better welfare in other municipalities,” Hansen said.
“I think it’s unreasonable and unfair. It’s a reverse Robin Hood effect,” he said.
Hansen did not say how the budget in Langeland would be affected specifically, but pointed out that there will be a lower overall budget for municipal services such as elderly care, schools, childcare and infrastructure.
The mayor of Herning, one of the municipalities to raise taxes, told DR the decision was “not for fun” but because Herning’s budget is under strain. The town has not increased its tax for 20 years, the mayor, Dorte West, also noted.
The chairperson of the national organisation for municipalities (Kommunernes Landsforening, KL), Martin Damm, is also the mayor of Kalundborg Municipality.
Damm told DR that he thinks a change to the rules should now be considered, but that the system had worked in the past because the amounts involved were relatively small.
Larger municipal tax increases can be felt by other municipalities, he recognised.
“The responsibility should be weighted more towards the individual municipality than the collective. That’s what could prevent this happening in future,” he said to DR.
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When 13 Danish municipalities put taxes up next year, it is not only people who live in the relevant local authorities who could be affected.
Taxes can be raised or cut by municipalities each year. But a higher rate of tax at individual municipalities cuts into a subsidy all municipalities receive from the state.
The subsidy, called bloktilskud in Danish, is reduced by an amount equal to that raised by the higher taxes.
Municipality tax (kommuneskat) forms around 25 percent of the overall income tax in Denmark, and is the personal income tax which covers municipal services.
The amount paid by individuals is dependent on the municipality in which they live and municipalities generally decide their own rates within limits set by the government. As a result, the municipal tax rate can range between about 22 and 27 percent depending on address.
Municipal tax is added to two other basic taxes, AM-bidrag and bundskat, as well as topskat for high earners, to calculate an individual’s overall income tax payment.
READ ALSO: Does Denmark really have the highest tax in the world?
The municipalities which have decided to raise taxes are: Frederiksberg (1.1 percent), Tårnby (1 percent), Vordingborg (0.6 percent), Rebild (0.5 percent), Herning (0.5 percent), Slagelse (0.5 percent), Horsens (0.3 percent), Aalborg (0.2 percent), Gentofte (0.17 percent), Rudersdal (0.15 percent), Fanø (0.11 percent) Greve (0,1 percent), Solrød (0.09 percent).
Copenhagen Municipality is reducing its tax however, by 0.1 percent.
The decision by individual municipalities to raise taxes has received criticism elsewhere because the national budget laws mean that raised taxes in some municipalities can affect budgets in others, as a result of the recalculation of the “block” municipal state subsidy.
“It’s a completely skewed system,” the mayor of Langeland, Tonni Hansen, told broadcaster DR.
“Langeland Municipality is one of the most economically challenged municipalities in all of Denmark. And now residents of Langeland have to help finance better welfare in other municipalities,” Hansen said.
“I think it’s unreasonable and unfair. It’s a reverse Robin Hood effect,” he said.
Hansen did not say how the budget in Langeland would be affected specifically, but pointed out that there will be a lower overall budget for municipal services such as elderly care, schools, childcare and infrastructure.
The mayor of Herning, one of the municipalities to raise taxes, told DR the decision was “not for fun” but because Herning’s budget is under strain. The town has not increased its tax for 20 years, the mayor, Dorte West, also noted.
The chairperson of the national organisation for municipalities (Kommunernes Landsforening, KL), Martin Damm, is also the mayor of Kalundborg Municipality.
Damm told DR that he thinks a change to the rules should now be considered, but that the system had worked in the past because the amounts involved were relatively small.
Larger municipal tax increases can be felt by other municipalities, he recognised.
“The responsibility should be weighted more towards the individual municipality than the collective. That’s what could prevent this happening in future,” he said to DR.
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