In a press release, Denmark's tax ministry estimates that the tax reductions in the bill amounted to about 11 billion kroner a year.
"We went to the polls promising to give the Danes significant tax breaks and I am delighted that we are now delivering on our promise to eliminate the middle tax, the top-top tax and lower the corporate tax by three percentage points," said Jakob Engel-Schmidt, the Minister of Taxation and Growth, who represents the centrist Moderate Party.
"With this agreement, we ensure that more than 600,000 Danes have more money in their hands. We are ensuring that our companies have a better opportunity to grow and strengthen their competitiveness with a significant reduction in corporate tax. And we are making it much more attractive to invest in shares by tripling the deposit in the share savings account," he said.
The four parties in the government agreed to scrap both the highest tax rate, toptopskat, and the middle tax rate, mellemskat, with Denmark instead moving to a simplified two-rate system with a basic state income tax or bundskat, set at 12 percent, and a top bracket tax, or topskat, for income above 800,500 kroner a year, set at 15 percent.
Pia Olsen Dyhr, leader of the Green Left Party, the most economically left-wing in the government, acknowledged that the tax reform was regressive, but said that this effect would be offset by other proposals in the budget.
“The tax agreement itself will increase inequality. That’s why we’re also putting together the rest of the budget, which includes introducing taxes on the wealthiest heirs and the most expensive homes,” she said.
As the government's two left-wing support parties, the Alternative and the Red-Green Alliance, refused to support the tax reform, it had to negotiate with the right-wing opposition, winning the support of the Danish People's Party in exchange for a commitment to cut tax on petrol and diesel taxes by 2 kroner per litre (including VAT) from next year.
Morten Messerschmidt, leader of the Danish People's Party, said the deal was "a huge victory for the Danes" with "the largest reduction in petrol and diesel taxes ever".
"The Danish People's Party has fought long and hard for cheaper petrol and diesel for the Danes, and I am proud that we have now ensured that this becomes a reality."
With the agreement, the far-right party also committed to voting for the government's proposal to abolish SU for young people living at home whose parents earn more than approximately 700,000 kroner per year.
The new tax agreement also includes the extension of the tax rebate on electric cars, which cost more than 366,000 kroner, for another year, even though the government had planned for it to be abolished.
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