Danish Economic Council Warns Government Over Tax Stop

by Ulrika Lomas, Tax-News.com, Brussels

06 February 2003

The Danish Economic Council has warned that a government-mandated tax freeze is wrecking the economy, and will prove counter-productive leading to an eventual tax hike of around 2.5%.

Speaking to the Danish media this week, the Economic Council members, or 'Wise Men' as they are known, warned that the tax stop is consuming government revenues at a frightening rate, and should be discontinued as soon as possible.

The Copenhagen Post reported on Wednesday that:

'According to the Council's calculations, discontinuing the tax stop would lead to a rise in the base level tax of 1% and bring the government's finance policy into balance in the future.'

The newspaper continued:

'The tax stop is only making problems worse, consuming real estate taxes and a host of expenses year after year. Just to allay the immediate effects of the tax stop, analysts say the government will have to impose a tax hike of 1.5%. In all, the base tax will have to be raised by 2.5% just to hold the government's finance policy together.'

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