'Totally skewed': Danish trade union and opposition hit out at proposed tax reform
Prime Minister Mette Frederiksen has been criticised over the structure of Denmark’s planned tax reform based on earlier statements which suggested lower earners would be in focus.
The proposed tax reform, presented by the government on Monday, offers reductions to all people who work in Denmark, with different measures targeting different income groups. Around 3.3 million working people in the country will see their taxes reduced as a result of the reform according to the government.
Single-parent families are among those to be offered an increase tax cut, while a new tax bracket, mellemskat or “medium tax” is proposed for higher earners whose incomes are between 618,400 kroner and 750,000 kroner, reducing tax on the applicable portion of their income from 15 percent to 7.5 percent.
Another new bracket, toptopskat, literally “top-top-tax”, will apply to people with annual incomes over 2.5 million kroner, who will pay 20 percent on income within this very highest bracket.
READ ALSO: How much could income tax payers in Denmark save on proposed cuts?
Groups which do not get a tax reduction under the proposed reforms include students, pensioners and people on unemployment benefits, with the proposal solely focused on people who are employed or self-employed.
Earlier this year, Prime Minister Mette Frederiksen stated at the Social Democratic party conference that the party supports “a bus driver, or someone who works at the cash register at Netto having a little more top spend on themselves”.
Calculations by libertarian thinktank Cepos, based on the proposed cuts at various income groups, have shown that people with higher incomes stand to save the largest amounts through the reforms.
As reported by broadcaster DR based on Cepos’ calculations, people who earn between 750,000 and 2.5 million kroner per year could pay 11,900 kroner less in tax.
Meanwhile, a bus driver with an annual wage of 447,000 kroner would get a tax reduction of 2,900 kroner and a supermarket checkout worker would save 1,800 kroner per year, the calculations state.
After some of the proposed reform was leaked last week, earlier calculations by CEPOS set out how people from various income brackets stood to gain or lose from the changes.
The centre estimated that only those eligible for the new so-called 'millionaire's tax' or top-top-skat, are likely to end up paying more tax.
The trade union which represents checkout staff, HK Danmark, criticised the proposal.
“It is completely skewed. I don’t think there’s anything fair about people who earn the most and don’t have the biggest needs being the ones who get a drastic amount more than very many of my members. It’s wildly skewed,” the chairperson of the union, Anja C. Jensen, said to DR.
Unions are not alone in criticising the distribution of the cuts, with the left-centre opposition Socialist People’s Party (SF) expressing comparable sentiments.
“It’s a very small amount. These tax cuts are not essentially tied to the lowest incomes. With these tax reforms it’s the highest incomes that gain from it,” SF’s tax spokesperson Sigurd Agersnap said.
The right-wing Danish People’s Party (DF) also said the proposal did not live up to expectations set by Frederiksen’s party.
“I think the government has put forward a very skewed proposal. And this is certainly very far from what the Social Democrats and Mette Frederiksen told us was on the way. It rewards those who earn the most and there’s not a lot for those at the bottom,” DF tax spokesperson Peter Kofod said.
“There’s too much of a difference between who gets what out of this tax plan,” he added.
Social Democratic Tax Minister Jeppe Bruus defended the structure of the proposal, noting that “those who get the most out of it by percentage are single providers, who can get up to 8,000 kroner per year. And those who earn over 2.5 million kroner are paying,” he said to DR.
“Almost regardless of the tax reform you impose, it will be the case that the more you earn, the more you will get out of it in terms of percentage, or in any case in terms of kroner and øre,” he said, referring to the Danish currency units.
Asked whether the government was right to cut the high end topskat tax bracket, Bruus said “we could have done that. But then we probably wouldn’t be presenting a tax reform or be in a cross-centre [coalition] government”.
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The proposed tax reform, presented by the government on Monday, offers reductions to all people who work in Denmark, with different measures targeting different income groups. Around 3.3 million working people in the country will see their taxes reduced as a result of the reform according to the government.
Single-parent families are among those to be offered an increase tax cut, while a new tax bracket, mellemskat or “medium tax” is proposed for higher earners whose incomes are between 618,400 kroner and 750,000 kroner, reducing tax on the applicable portion of their income from 15 percent to 7.5 percent.
Another new bracket, toptopskat, literally “top-top-tax”, will apply to people with annual incomes over 2.5 million kroner, who will pay 20 percent on income within this very highest bracket.
READ ALSO: How much could income tax payers in Denmark save on proposed cuts?
Groups which do not get a tax reduction under the proposed reforms include students, pensioners and people on unemployment benefits, with the proposal solely focused on people who are employed or self-employed.
Earlier this year, Prime Minister Mette Frederiksen stated at the Social Democratic party conference that the party supports “a bus driver, or someone who works at the cash register at Netto having a little more top spend on themselves”.
Calculations by libertarian thinktank Cepos, based on the proposed cuts at various income groups, have shown that people with higher incomes stand to save the largest amounts through the reforms.
As reported by broadcaster DR based on Cepos’ calculations, people who earn between 750,000 and 2.5 million kroner per year could pay 11,900 kroner less in tax.
Meanwhile, a bus driver with an annual wage of 447,000 kroner would get a tax reduction of 2,900 kroner and a supermarket checkout worker would save 1,800 kroner per year, the calculations state.
After some of the proposed reform was leaked last week, earlier calculations by CEPOS set out how people from various income brackets stood to gain or lose from the changes.
The centre estimated that only those eligible for the new so-called 'millionaire's tax' or top-top-skat, are likely to end up paying more tax.
The trade union which represents checkout staff, HK Danmark, criticised the proposal.
“It is completely skewed. I don’t think there’s anything fair about people who earn the most and don’t have the biggest needs being the ones who get a drastic amount more than very many of my members. It’s wildly skewed,” the chairperson of the union, Anja C. Jensen, said to DR.
Unions are not alone in criticising the distribution of the cuts, with the left-centre opposition Socialist People’s Party (SF) expressing comparable sentiments.
“It’s a very small amount. These tax cuts are not essentially tied to the lowest incomes. With these tax reforms it’s the highest incomes that gain from it,” SF’s tax spokesperson Sigurd Agersnap said.
The right-wing Danish People’s Party (DF) also said the proposal did not live up to expectations set by Frederiksen’s party.
“I think the government has put forward a very skewed proposal. And this is certainly very far from what the Social Democrats and Mette Frederiksen told us was on the way. It rewards those who earn the most and there’s not a lot for those at the bottom,” DF tax spokesperson Peter Kofod said.
“There’s too much of a difference between who gets what out of this tax plan,” he added.
Social Democratic Tax Minister Jeppe Bruus defended the structure of the proposal, noting that “those who get the most out of it by percentage are single providers, who can get up to 8,000 kroner per year. And those who earn over 2.5 million kroner are paying,” he said to DR.
“Almost regardless of the tax reform you impose, it will be the case that the more you earn, the more you will get out of it in terms of percentage, or in any case in terms of kroner and øre,” he said, referring to the Danish currency units.
Asked whether the government was right to cut the high end topskat tax bracket, Bruus said “we could have done that. But then we probably wouldn’t be presenting a tax reform or be in a cross-centre [coalition] government”.
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