New fiscal policy

A general meeting of the Socialist Party of Iceland (Sósíalistaflokkur Íslands), held on December 12, 2020, approved the following policy for the party on public finances:

The Socialist Party of Iceland wants all emphasis in public finances to be on welfare and equality, that people receive what they need from the state and pay what they can to public consumption. The country's main infrastructures, such as the education system, healthcare system, banking system, transport system, welfare system, energy utilities, and more, should be socially operated, and the state should not outsource related tasks and should be a role model in honest business practices. Services in the healthcare, education, and public transport systems should then be free of charge for residents outside the tax system, as stated in the party's policies on education, healthcare, and transport.

In recent decades, the state's financial policy has led to increased costs for the public in services, whether healthcare, education, or other basic services, e.g., through various co-payment systems. Neoliberalism and the public's indulgence of capital owners and large corporations have led to increased inequality in society, and the gap between the wealthy and those living in poverty is constantly widening. A few families in Iceland own most of the wealth, and in the name of stability, low-income people, senior citizens, disabled people, and the unemployed are made responsible for the state's cuts.

The Socialist Party of Iceland wants an immediate response to the welfare austerity policy that has prevailed in the name of neoliberalism with a radical overhaul of the financial system. This development, in the form of the system bleeding families and businesses and a constant demand for a ban on deficits so that debts may not exceed 30% of GDP, can be reversed by implementing methods such as MMT (or Modern Monetary Theory), which allows for better control of capital flow, keeping interest rates low, and guiding us out of the constraints of neoliberalism.

The country's resources, whether fish in the sea, lakes, waterfalls, geothermal energy, forests, land, tourist attractions, and more, should be sustainable and kept in national ownership. Resource tax should be increased and ensured to improve the nation's basic capital stock, but resources should not be a gift to the wealthy that can be transferred, inherited, and speculated with.

The emphasis in the country's public finances shall always be on the welfare and equality of the public so that all our systems support the less fortunate, and those people and companies that are better off contribute more to common funds. The wage system should be made fairer so that wage differences are more reasonable both within the state and the private sector by setting the highest wages at no more than three times the lowest wages, and that anything paid in excess of three times the lowest wages within companies is not written off as a cost to the company and would not be deducted from income before tax assessment.

The tax system should then be used in every way as a real income equalization tool, and personal tax credits significantly increased and adjusted according to price changes in recent years, tax brackets increased, and high-income tax collected so that there is a full wealth tax here.

Furthermore, it should be prevented that private limited companies and their subsidiaries can be used to hide income, and capital income should be combined with earned income so that the wealthy cannot avoid paying normal taxes on their income like workers.

Tax investigations shall be carried out as they should, with the aim of achieving the desired results, and not chasing after poor people, disabled people, and sole proprietors, but rather focusing on high-income individuals and large corporations that may be evading taxes.

The tax system must take into account the societal changes reflected by robotization. Many jobs will be lost in the industrial revolution we are witnessing, and this needs to be addressed with taxation earmarked for the welfare system or social security.

Children shall not be taxed under the age of 18, but limits shall be set on how much they can hold in an account so that their accounts cannot be misused. The VAT system needs to be reviewed, and taxation on essential basic goods, medicines, safety products, and children's products abolished, and the number of VAT brackets increased.

The banking system in Iceland needs a thorough review regarding its value and role. A community bank should be established, which will, among other things, be able to change the landscape of the housing market. Furthermore, indexation should be abolished, and complete bank secrecy ended so that tax havens can be traced and their use prevented.

Seldom has there been such a great need for innovation and cooperatively run small businesses. The tax system shall take into account the size of companies, and large corporations shall be partially democratized, but the tax system shall also include corporate income tax brackets, as is common abroad, which prevents larger companies from having more opportunities to reduce tax payments than smaller ones.

Furthermore, the state shall pursue an active employment policy and conduct research and be formative in its development, offer employment insurance to respond to economic fluctuations, and the public sector shall also offer part-time jobs to an increasing extent and build incentives into the system so that private companies do the same.

Clearer rules shall apply to the registration of MPs' interests, and individuals who have too strong ties to large corporations or capital shall not have access to parliamentary seats/ministerial positions so that it is undisputed that MPs work for the public good.

parliament (Alþingi) and the Ministry of Finance shall seek active cooperation with the public when it comes to financial policy-making so that they reflect the will of the people and the real living conditions in the country.

The policy of the Socialist Party of Iceland (Sósíalistaflokkur Íslands) regarding public finances is......that the emphasis of the country's public finances is on welfare and equality....that the country's financial policy shall be reviewed, and methodologies such as MMT (or Modern Monetary Theory) shall be implemented, which is one way out of the constraints of neoliberalism....that the state finances and attends to the basic infrastructure and needs of the nation, such as the education system, healthcare system, banking system, transport system, welfare system, energy utilities, and more....that a full charge for the utilization of nationally owned resources shall be collected so that resource rent forms one of the main revenue sources of the state treasury....that the highest wages are never higher than three times the lowest wages within the public sector, and that anything paid in excess of that within private companies is not calculated as a deductible expense before income tax is levied on the company....that wages, pension payments, and benefits that people need to live on are never so low or cut that they hover on the brink of international and national poverty thresholds....that tax-free limits shall be significantly increased and follow the index....that the tax system is used for income equalization with high-income tax and more tax brackets....that capital income is combined with other income so that the wealthy do not avoid income tax....that laws on private limited companies are changed so that income or assets cannot be hidden for the purpose of avoiding normal taxes or municipal taxes....that tax investigations focus on high-income individuals and large corporations....that the VAT system is reviewed, and VAT on essential basic goods is abolished....that automation and robotization are taxed and earmarked for the social security system....that children are not subject to tax assessment under the age of 18, and limits are set on their assets so that their IDs cannot be misused for financial purposes....that a community bank is established....that indexation is abolished....that complete bank secrecy is ended so that tax havens can be traced and their use prevented....that the state pursues an active employment policy and is formative in its development through research and direct participation, encourages part-time work, and offers employment insurance....that startups/innovation and new and small businesses receive increased support, and the tax system takes into account the size of companies with tiered corporate income tax....that large corporations are democratized....that people who have too strong ties to large corporations or capital do not have access to parliamentary seats/ministerial positions so that it is undisputed that MPs work for the public good....that parliament (Alþingi) and the Ministry of Finance seek active cooperation with the public when it comes to financial policy-making so that they reflect the will of the people and the real living conditions in the country.