Public finances

Policy accepted December 12, 2020

That the state attends to the needs of the people, finances and operates the country's basic infrastructure such as the school system, healthcare system, banking system, transport system, welfare system, power utilities and more.

That a full fee be collected for the utilization of nationally owned resources so that the resource rent would constitute one of the main revenue sources of the state treasury.

That wages, pension payments, and benefits that people are entitled to live on are never so low or reduced that they are on the brink of international and national poverty thresholds.

That capital income be combined with other income so that the wealthy do not avoid income tax.

That children do not incur tax assessments before the age of 18, limits are set on their assets so that their ID numbers cannot be misused for financial purposes.

That indexation be abolished.

That the state operates an active employment policy and is instrumental in its development through research and direct participation, encourages part-time jobs, and offers employment availability insurance.

That the parliament 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 real living conditions in the country.

That the highest wages are never higher than three times the lowest wages within the public sector, and that what is paid in excess of that within private companies is taxed as owner's profit.

That the tax-free threshold be significantly raised and follow an index.

That automation and robotization be taxed and earmarked for the social security system.

That a community bank be established.

That complete bank secrecy be ended so that tax havens can be traced and their use prevented.

That people who have too strong ties to large corporations or capital do not have access to a parliamentary seat/ministerial position so that it is undisputed that MPs work for the public good.

That the country's public finances emphasize welfare and equality.

The country's financial policy must be reviewed and a methodology such as MMT (or Modern Monetary Theory) should be implemented, which is one way out of the constraints of neoliberalism.   

That the law on private limited companies be changed so that it is not possible to hide income or assets for the purpose of avoiding normal taxes or municipal tax payments. 

That startups/innovation and new and small businesses enjoy increased support and that the tax system takes into account the size of companies with a tiered income tax for them. 

That the tax system is used for income equalization with high-income tax and more tax brackets.

That the value-added tax system be reviewed and value-added tax on essential basic goods be abolished.

That large corporations be democratized.

Additional content

The Socialist Party of Iceland wants all emphasis in public finances to be on welfare and equality, people receive what they need from the state and pay what they can towards public consumption. Furthermore, the country's main infrastructures, such as the school system, healthcare system, banking system, transport system, welfare system, energy utilities, and more, should be socially operated, and it should be ensured that the state does not outsource related tasks and sets an example 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, health, 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 resulted in increased inequality in society, and the gap between the wealthy and those living in poverty is constantly widening. A handful of families in Iceland own most of the wealth, and in the name of stability, low-income people, senior citizens, disabled individuals, and the unemployed are held 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 complete overhaul of the financial system. This development, in the form of the system draining families and businesses and the constant demand for a deficit ban 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 item for the wealthy that can be transferred, inherited, and speculated with.

The emphasis in the country's public finances shall always be on public welfare and equality, 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 capping the highest wages at most three times the lowest wages, and that anything paid above three times the lowest wages within companies is not written off as a company expense but would be taxed as owner's profit.

The tax system should then be utilized 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 a full wealth tax is imposed here.

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

Tax investigations shall be carried out properly with the aim of achieving their intended results, and not pursuing poor people, disabled individuals, and sole proprietors, but rather focusing on high-income earners and large corporations that may be evading taxes.

The tax system must take into account the societal changes reflected by robotization. Many jobs are 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 should be set on how much they can hold in an account to prevent misuse of their accounts. 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 values 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 an end put to complete bank secrecy 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, conduct research, and be formative in its development, offer employment supply insurance to respond to economic fluctuations, but the public sector shall also increasingly offer part-time jobs and build incentives into the system for private companies to do the same.

Clearer rules shall apply to the registration of interests of members of parliament, and individuals with excessive ties to large corporations or capital shall not have access to parliamentary seats/ministerial positions so that it is undisputed that members of parliament work for the public interest.

Parliament 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 real living conditions in