Every party in the opposition has bothered the current government about either the tax stop or reversely to look at tax reform. Nobody dares to say it, but everybody knows that the tax system cannot be touched before after the current plan towards 2010 runs out. So it's mostly to gain political momentum along the lines of 'I told you so' in the long wait till then. In other words, it's a polical dance around the scene until the budget negociations for 2010 starting this summer.
Today the tax commission published its report with suggestions to the government to our future economic problems. And the wise chairman, Carsten Koch, assured everybody at the press conference that the commission suggestions were not based on dynamic effects. But were all fully financed through tax reform, removing the middle tax entirely, and adding supplementary green taxes. And then. In the future there will be more (non-working) elderly people - to be financed by graduately reduced numbers of people in the work force. Only half of the future problem with lacking work force will be solved through this tax suggestion, about seven billion DKK. The rest - it turned out - would be assured by convincing people to work more, through tax reliefs. Overlooking the fact that several surveys show that people are not likely to use tax reliefs to work more. Three out of four would rather spend more time with their families. Still, isn't that what some people call dynamic effects? I'm sorry, I'm just paradoxed here.
The students were to have their student grants reduced from the fully financed six years (one year more than candidate level) to just four years. Whether they are to work at McDonalds or become poorer students, there is no sure way of saying. The winners seem to be the really poor and the really wealthy. Whereas the middle income house owners will gain less, and pay more over time. Perhaps a reprimande for the past couple of years of overspending on house loans and blown up house prices?
There is something for everybody in this reform: Greener economy, relieving the poor, creating dynamic effects, making the wealthy happier. This should satisfy political parties from The Socialists (F), The Social Democrats (S), The Social-Liberals (B), to The Liberals (V), The Concervatives (C), and The Danish People's Party (O). Each with little bits and pieces to match their political agendas. The only losers seem to be middle income people, students, house owners, and private companies. But hey, aren't those the ones to make the economic wheels run, now and in the future? Let's see how this tax reform plays out in the political negociations to follow.
For further information, see:
http://www.skattekommissionen.dk/
http://paradoxicalnews.blogspot.com/2008/12/dynamic-debate-or-comic-relief.html
http://paradoxicalnews.blogspot.com/2008/10/cliff-notes-to-danish-politics