The tax freeze Kristian Jensen Minister for taxation.

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Presentation transcript:

The tax freeze Kristian Jensen Minister for taxation

The tax freeze Comprehensive and clearly defined No taxes or excise duties can be raised Only a few, well-defined exceptions – and the taxpayers get their money back by matching tax cuts

What they predicted: Run out of money Growing popular dissatisfaction

What happened? Record budget surpluses Single most popular policy, supported by all major parties

Why so successful? Strong economy, not tax hikes, is the key to sound government finances The tax freeze as a credible commitment

The tax freeze the benefits clearly outweigh the costs the cost is having not to raise taxes

A plan for further tax cuts: The two constraints Fiscal sustainability Avoid “overheating”

The constraints Business cycle considerations not necessarily the most binding constraint: Tax cuts reduce excess demand, if capacity effect exceeds demand effect Fiscal sustainability requirement: kr 1 per kr 1 tax cut Business cycle requirement: øre 50 per kr 1 tax cut

Tax cuts its about freedom of choice

Economic freedom it is not only about taxes