Power to the people!

Policy Statement of the Socialist Party of Iceland for the 2022 Municipal Elections

The local environment is the community we are most connected to. The municipality should be built based on the expectations and needs of the people who live there, not on the premises of capital. The Socialist Party wants to democratize public administration so that decisions affecting people's lives are made within the municipalities and by the residents, rather than by the state. We must start with the needs of those living in the worst conditions and then build up, thus creating a good society designed for all of us. To achieve this, we must:

Ensure municipal revenues

Socialists believe that in many cases, public services are better provided by municipalities rather than the state. For this to work, their revenues must be significantly increased. For too long, the state has outsourced tasks to municipalities without providing sufficient funding or revenue sources. Socialists therefore want to increase municipal revenue sources and ensure that increased funding accompanies tasks assigned to them. Emphasis is placed on providing funding based on the actual cost of providing the service.

Tax capital owners

The municipal income tax (útsvar) is the most significant revenue source for municipalities. Today, municipal income tax is only levied on earned income and benefits. Capital income, on the other hand, bears no municipal income tax. The incomes of the wealthiest are largely capital income, and these individuals therefore do not pay the same proportion of their income to the municipalities as the rest of us. Capital owners therefore do not pay their fair share into the common fund of the city or town, unlike the wage earners of the respective municipality.

Socialists intend to counteract this imbalance in taxation and strengthen municipal revenue sources by levying municipal income tax on capital income. This is important so that municipalities have the capacity to handle all the tasks that come their way and to ensure they can provide the best possible service. Municipalities collectively lose many billions each year because capital owners do not pay municipal income tax, even though they enjoy the same services as other residents.

Municipal income tax is not levied on capital income except by laws from parliament, and therefore it is important that municipalities unite in bringing about these legal changes. Capital income would have a 300,000 ISK tax-free threshold, as is currently the case, so that municipal income tax would only be paid on capital income above that threshold. For example, an individual with 60 million ISK in a bank account would not pay any capital income tax on it.

Socialists demand that capital income be taxed like other income and that the tax be progressive. There would also be a 300,000 ISK tax-free threshold on the tax, as is currently the case. Today, the marginal tax on earned income is 46.25%, while the marginal tax on capital income is only 22%.

Municipal income tax revenues for municipalities would have amounted to over 17 billion ISK in 2020 if capital income had been taxed like earned income.
Reykjavík could have received almost 7 billion ISK in municipal income tax from capital income in 2020, and Akureyri over half a billion, to name a few examples.
It is clear that municipalities would be able to use such funding for large-scale development of services for residents.

Facility fees on companies

Socialists demand that municipalities in the country unite to advocate for facility fees to be reinstated on companies so that they pay for the infrastructure their operations rely on. Facility fees were a significant part of municipal revenue sources and can be seen as a kind of municipal income tax on companies, and it is natural that they pay such fees into our common resident funds.

The facility fee was a turnover-based tax that went to municipalities. It amounted to 1.3% of companies' turnover. Companies are independent tax entities and should pay to their local environment like individuals, as companies use municipal infrastructure no less than individuals; they use streets and utilities, benefit from staff education and childcare, to name a few examples. Companies grow and thrive most in a well-organized society, and they should pay for that benefit.

The facility fee should be progressive, so that the smallest companies pay little, but the very largest pay a lot.
Tax exemption from facility fees can be used to stimulate innovation, establish cooperatives, or encourage unemployed people to start their own businesses.
The size of companies reflects their position in society; the larger they are, the more favorable their position in society, and it is natural to tax that position.

The state should determine the facility fee so that municipalities do not engage in tax competition for the largest companies and lure them by abolishing or significantly lowering the facility fee. Tax competition between municipalities and states has undermined societies in our part of the world and must be stopped.

Companies with operations in multiple municipalities, such as energy companies, banks, many state-owned companies, and some large corporations, should pay a so-called national municipal income tax instead of a facility fee, and their tax will be distributed to municipalities in proportion to population and scope of operations.

Alcohol tax

Municipalities should initiate discussions with the state to ensure that at least 10% of the alcohol tax goes to municipalities for essential services for those struggling with alcohol and substance abuse. Municipalities need increased funding to be able to offer the best possible social services for these individuals and their families. This includes, among other things, the management of shelters, harm reduction measures, homes suitable for individuals with severe alcohol or substance abuse, and homes suitable for individuals with dual diagnoses, i.e., mental health and substance abuse issues.

Designated housing areas

Housing is a human right that we all are entitled to. People's housing should not be a playground for speculators, and it is natural that a large part of its development is non-profit. Waiting lists for housing with public authorities or associations should not be a reality. Low-income people in the rental market are now mostly squeezed between low incomes and exorbitant rents. To protect these people until the development of social housing has permanently lowered rental prices, housing support must be increased so that no one pays more than a quarter of their income in housing costs.

Affordable and secure housing is a prerequisite for all welfare and health services. The fundamental prerequisite for building a robust welfare system here, which is essential for eradicating poverty, is a major effort in the construction of social housing. Socialists propose a housing revolution where 30,000 social housing units will be built across the country in the next ten years.

The state and municipalities need to work together on this development, which is proposed to be done in the following way:

A Public Housing Fund (Húsnæðissjóður almennings) will be established, which will raise 70% of the necessary capital by issuing bonds to be sold to pension funds and other investors. The bonds' collateral is secure, residential housing in secure long-term leases, and will therefore bear comparable interest rates to government bonds.
About 13% of the cost will be contributed by municipalities and the state in the form of land, and 17% will come as a loan from the state treasury at the lowest interest rates, a loan that will be repaid over the lifespan of the apartments. Capital costs will therefore be as low as possible today.
The Public Housing Fund will then lease housing to Public Rental Companies (Leigufélög almennings), which can be of various types: municipal rental companies, student associations, associations for disabled people, the elderly, single parents, or any kind of public organizations.

Power back home

A large part of public services; for children, disabled people, senior citizens, and vulnerable groups, falls within the scope of municipalities. The state overlooks the importance of municipalities in local services and has, through underfunding, prevented municipalities from fulfilling their duties to the public. We demand that this be corrected in accordance with actual costs.

Socialists also want to explore the possibility of establishing a third administrative level to combine the benefits of scale and local community. Such an administrative level would take over tasks currently handled by the state and, in some cases, municipalities. Cooperation through the third administrative level would also make it possible to provide services that are currently only available in Reykjavík, closer to residents who do not live there. With this, Socialists aim to reduce the state bureaucracy and transfer power and services to the residents themselves.

Democratization of society

Socialists want to increase democracy by giving users of municipal services and public service employees more power in decision-making within the system. Users and providers of public services are often in a better position to make decisions than elected representatives who often lack the necessary expertise. To increase this public participation in decision-making, Socialists emphasize the following:

Users and providers of public services should formally participate in decision-making alongside elected representatives. This would allow staff and residents in nursing homes to participate in policy-making in that sector, public transport users in their affairs, staff such as teachers and school assistants, students, and parents to participate in decision-making in school matters, and so on.
People with direct experience of what needs to be improved in the local community should sit on municipal committees and councils.
Direct democracy with resident referendums on municipal matters. Switzerland should be looked to in this regard, where resident involvement in affairs is a strong element of the governance system and is, for example, achieved through online voting and general referendums. The results should be binding.
Residents of municipalities should formally participate in the allocation of funds for projects through participatory budgeting. Such public participation in decision-making originates from the administration of the Brazilian Workers' Party in Porto Alegre, which has successfully practiced participatory budgeting since 1988 and has been adopted in other cities and towns around the world by socialist and other left-wing administrations. Such participation can be implemented online and at public meetings where elected representatives and residents come together for budgeting and set the framework that residents desire.
The expertise and experience of staff should be utilized for decision-making and management of public services. This way, we build on knowledge from, for example, bus drivers and waste collection staff, to name a few examples.
Socialists envision that residents, service users, and elected representatives will jointly participate in the management and implementation of public services so that collective knowledge is utilized to the fullest.
Public transport should be designed by the people who rely on it, so that buses are for people and managed by the people who use buses. The future of public transport should be shaped by the demands of those who depend on public transport. Passenger representatives should sit on the board of Strætó.

Free basic services: Welfare is for all of us

The public has a right to access basic services from society. We all have a right to healthcare, both physical and mental, food security, education, and secure housing. Socialists reject the notion that people's lives and health should be subject to market forces. The fundamental pillars of society should not be market commodities where profitability is the demand. These fundamental pillars shall be socialized so that we can all live free from health-damaging conditions, financial anxiety, and fear of destitution.

All municipal services related to people's health and welfare shall be free of charge and operated by public entities or by non-profit social organizations where applicable.
Public transport such as bus services, city line (Borgarlína), transport services for disabled people, and transport services for the elderly shall be free of charge. Road tolls shall not be collected on national roads.
The entire road network should be free of charge, funded by the state, and all citizens guaranteed free passage on it. Our road network has been almost entirely a public good, but now decisions by the current government are imminent regarding a radical systemic change in the spirit of neoliberalism, where all major projects can be expected to be privatized and road tolls imposed. We completely reject that path and will fight against it with all our might.
Access to public museums shall be free of charge. Libraries, cultural institutions, and public parks shall be strengthened as open spaces where everyone can gather regardless of economic status.
Public institutions shall not charge fees for their services, and access to free legal aid shall be increased for those who need to assert their rights against public authorities and other institutions and companies.

Children should not pay

Children have no income and should not pay fees. Municipalities should be designed based on the needs of children. Children must be specifically protected from poverty and ensured that they receive all the support they need. It is important that sufficient funding is secured for educational institutions so that all children receive the support and assistance they need within the school walls. This support shall be provided regardless of whether children are on a waiting list for diagnosis or not.

Education at all school levels shall be free of charge. Free school meals shall be offered.
Sports and leisure activities shall be free of charge for children and adolescents.
Speech therapists and specialists providing services to children shall work within the school walls.
It must be ensured that schools and surrounding areas are designed based on the differing needs of children.
Children of foreign origin shall be guaranteed Icelandic language instruction and mother tongue instruction.

Away with outsourcing and low-wage policies in municipalities

Low-wage policies shall be abolished in municipal operations. All outsourcing shall cease, and staff shall work directly for the municipality. Outsourcing only leads to lower wages, worse working environments, and poorer services for residents.

Outsourcing shall cease in municipalities and in companies owned by them.
All municipal staff shall work directly for the municipality and not for temporary employment agencies or subcontractors, nor otherwise experience reduced rights.
The terms and working conditions of school staff shall be improved for the children, adolescents, and the staff themselves.
It shall be ensured that the terms and working conditions of those working in care are good.
Municipal financial assistance shall be increased so that it is sufficient to live a dignified life. The amount shall be increased so that people, regardless of living arrangement or cohabitation status, receive a dignified income.

Approved at a meeting of the Executive Board (Framkvæmdastjórn) and the Policy Board (Málefnastjórn) of the Socialist Party.