OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Increasing Simplicity, Neutrality and Sustainability

A Basis for Tax Reform in Iceland

This paper analyses the possibilities for reforming the Icelandic tax system. It puts the current tax structure in its historic context, showing that there has been a steady movement towards simplification. The personal income tax has a lower than average number of bands and, taxes capital income at an unusually low rate. Such a structure favours saving, especially since consumption taxes are particularly high. Nonetheless, there are a number of additional taxes on capital income that serve to raise the overall tax on assets, notably the tax on net wealth. The paper concludes that, if the current budget surplus persists over the medium-term, priority should be given to further reducing corporate taxes and the net wealth tax. At the same time, a number of discriminatory indirect taxes should be replaced by a uniform tax, and the diesel tax reformed. Consideration should also be given to the gradual introduction of a resource tax or to auctioning fishing quotas to help fund the other ...


Keywords: taxation, tax policy, Iceland
JEL: H2: Public Economics / Taxation, Subsidies, and Revenue
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error