The Danish Government's Proposal for the National Budget
From left: Minister of Finance Kristian Jensen; Minister of Tax Karsten Lauritzen; Minister of Economic Affairs & the Interior Simon Emil Ammitzbøll and Minister of Business Brian Mikkelsen. Photo Credit: dr.dk

This week, the government kicked off a new political season by presenting a tax reform and a business / entrepreneur proposal.

Today, the government, headed up by Minister of Finance Kristian Jensen, presented their proposal for next year’s national budget (Finansloven 2018). The elements in these proposals serve as a platform for the upcoming budget negotiations this Fall.

The most notable proposals are:

  • Public Expenditure: The government is aiming for a growth rate in the public expenditure of 0.5 percent, which means that DKK 2.3 billion will be added to next year’s national budget. According to the Ministry of Finance, the public expenditure requires a growth rate of 0.6 percent to keep pace with demographic development.

  • ‘Negotiation Reserve’: The next four years, the government will set aside a DKK 2.5 billion ‘negotiation reserve,’ earmarked for negotiations with parliamentary partners (ie: The Danish People’s Party). This year, the government is seeking support to spend that reserve on increased funding for the Defense Command, the Danish National Police and the Danish Prison and Probation Service. The government has promised the Danish Defense Command a ‘substantial boost.’

  • Research Tax Scheme: The scheme will be extended from five to seven years. The extension will be financed by raising the tax rate from 26 percent to 27 percent (self-financing).

  • Employee Shares: In the government’s business initiative, it proposes to increase the upper limit for how much of an employee’s salary that can be paid as employee shares. The limit will be raised from 10 to 20 percent, which will cost DKK 35 million annually on the national budget. Furthermore, the government proposes that small businesses will be able to pay 100 percent of an employee’s salary in employee shares. That will cost DKK 45 million annually.

  • Stock Share Account: Inspired by Sweden, the government proposes a stock share account in order to make it more attractive for Danes to invest in companies. As a part of this, the tax rate on equity income will be also be lowered.

  • Foreign Investments: The government will allocate DKK 30 million to lower the taxes for foreign investors placing capital in Danish investment institutions

  • Great Belt Bridge: The government proposes to lower the fare for crossing Storebæltsbroen (Great Belt Bridge) by 25 percent over the next three years.

  • The Danish National Rail: The government will decrease funding to DSB - The Danish National Rail – in order to make the service provider more efficient. DSB will have to streamline their processes during the course of the next four years, decreasing its spendings by DKK 829 million by 2021.

  • Restore SKAT: A majority of the Danish Parliament has already agreed on allocating DKK 6.7 billion to restore the Danish Tax Authorities, however, the government is proposing to increase that amount by an additional DKK 1.7 billion over the next three years.

  • Tax Control: DKK 400 million is earmarked to monitor small to medium size business’ tax payments.

  • Cyber Crime: DKK 100 million will be allocated to create a new cybercrime strategy.

  • Development Aid: The less than expected number of asylum seekers means that the government will earmark 12.6 billion Danish Kroner for development aid in the third world. That is DKK 4.5 billion more than in the 2016 national budget.

Source: The Government’s National Budget Proposal; Ritzau; Altinget

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