On 6 September 2019, Mr. Bjarni Benediktsson, the honorable Minister of Finance and Economic Affairs of Iceland introduced the fiscal budget proposal for 2020 that would be presented before Parliament on Tuesday 10 September 2019. Among the salient features of the proposal is that the personal income tax (PIN) will be lowered more rapidly than previously planned, with the full reduction achieved by 2021 instead of 2022. This measure will increase disposable income for the lowest-income persons by just over ISK 120,000. The total annual scope of the measure is about ISK 21bn, or about 10% of the Treasury’s PIN-generated revenues.
In addition to the reduction in the PIN is the latter phase of the 0.5 percentage point reduction in the payroll tax, which was lowered by 0.25 percentage points at the beginning of 2019. By the turn of the year, the payroll tax will have been lowered from 7.69% in 2013 to 6.35%, supporting job creation and shoring up firms’ operational foundations.
