Icelandic Cod Wars

Who would have guessed that something as harmless as fishing spots could incite wars between two nations? In a way, that’s exactly what happened between Iceland and the United Kingdom during the 3 Cod Wars.


In the 1950s and 1970s, the island-neighbor nations engaged in naval conflicts over territorial waters. Iceland had extended the borders of its own waters into what the UK regarded as international waters. The problem? Fishing ships from the UK and other countries had used this section of the sea for decades, and the action by Iceland would damper their fishing industry.

Why Go To War?

In the early 20th century, much of Iceland was heavily dependent on income from the fishing industry. With the recent invention of the steam-powered boat, fishing trawlers could venture farther from land, so the Icelandic Government increased the distance from the mainland in which waters were considered Icelandic territory.


The British Government, realizing that this action could set a precedent other countries might follow, ignored the change in boundaries and ordered warships to protect their trawlers.

Several incidents occurred in the 1950s, including the collision of an Icelandic patrol vessel and the British HMS Russell. Soon after that, the Icelandic patrol vessel María Júlía fired upon the British trawler Kingston Emerald, forcing it to retreat.


Eventually, the two sides essentially agreed to disagree. They determined that if any future disagreements were to arise, they would consult with the International Court of Justice. However, two decades later, a different political party led the Icelandic government, which then ignored the treaty. This time, the boundary was expanded to 50nm from the mainland, more than four times the distance of the first disputed boundary. This led to the second cod war.

Several violent incidents occurred and during this war, the Icelandic coast guard started to use net cutters to cut the trawling lines of non-Icelandic vessels fishing within the new exclusion zone. The British government sent more warships to protect their fishing boats.


After a series of talks within Nato, British warships were later recalled. An agreement was signed which limited British fishing activities to certain areas inside the 50 nmi (93 km) limit, resolving the dispute that time. This agreement expired in November 1975, and the third "Cod War" began.

Resolution of the Conflict

In 1975 Iceland again increased it´s demands and declared that the ocean up to 200 nautical miles (370 km) from its coast fell under Icelandic authority.


There were several incidents of ramming by Icelandic ships and British trawlers, tugboats and frigates. British trawlers also saw their nets cut by the Icelandic coast guard. This was only a minor inconvenience to the British, but the government of Iceland had a strong strategic position.

Iceland threatened to close the NATO base at Keflavík, which would have severely threatened NATO’s position in the Atlantic Ocean during the United States’ conflict with the Soviet Union. As a result, the British, under pressure from the United States, agreed to relent to Iceland.


200 nm is now the seazone prescribed to nations by the United Nations Convention on the Law of the Sea.

All in all, both the British and Icelandic sides experienced one casualty each. A British fisherman was killed when a heavy rope was cut and recoiled into his body, and an Icelandic Coast Guard engineer was electrocuted when his welding equipment was flooded with seawater.

Source: Guide to Iceland
Iceland24, December 2013

Regret over Iceland's first police shooting

Icelandic police have shot dead a man who was firing a shotgun in his apartment in the early hours of Monday. It is the first time someone has been killed in an armed police operation in Iceland, officials say. Tear gas canisters were fired through the windows in an attempt to subdue the 59-year-old, who lived in the east of the capital, Reykjavik.


When this failed he was shot after firing at police entering the building. Between 15 and 20 officers took part. Back-up was provided by special forces. The tear gas was used when the man, who has not been named, failed to respond to police attempts to contact him and continued shooting.

When they entered the apartment, two members of the special forces were injured by shotgun fire - one in the face, the other in the hand.


Police stated during a press conference earlier today that policemen were shot at when trying to enter the gunman’s apartment. On one occasion, police shot at the man in an attempt to overcome him. The man was rushed to the hospital’s emergency ward but was pronounced dead.

Motives unclear

“All available members of the police force were deployed, and they tried to subdue him, but it was not successful,'' Reykjavik Metropolitan Police Commissioner Stefan Eriksson told a press conference, according to local media website Visir.


“The man began to shoot out the window of the apartment and it was decided to take action.'' The motives of the man, who has not been named, are unclear. According to RUV, Iceland's national television station, the gunman had been making threats to his neighbors. Shotguns for hunting are legal in Iceland.

Many Icelanders believe that the country rarely sees gun violence in part because handguns are banned.

Source: BBC News, Icelandreview and Aljazeera
Iceland24, December 2013

Icelandic QuizUp’s App: The Biggest trivia game in the world

So we fell in love with QuizUp immediately. The trivia app lets you challenge your friends, or random opponents, in trivia categories like tech, science, literature, Game of Thrones, even corporate logos.


Plain Vanilla was originally founded in Iceland by Fridriksson shortly after he finished his studies at Oxford University. Its first project was a children’s entertainment app for iPad called Moogies. That game was published by Chillingo in late 2011. It got good critical ratings, but it wasn’t a commercial success. In early 2012, Plain Vanilla was almost out of money. But the team came up with its idea for QuizUp. They tries to get backers in Iceland but failed. So they moved to San Francisco, where they raised $1 million in a seed round in the summer of 2012. In March, they raised another round.


Plain Vanilla Games, the creator of the QuizUp iPhone game that it calls the “biggest trivia game in the world,” has raised $2 million in a new round of funding.


Plain Vanilla raised the money from eVentures and Sequoia Capital just a little over a week after it launched its mobile trivia title, which has more than 100,000 questions in 300 categories. The free-to-play game hit No. 1 among free apps on the iTunes App Store, with more than 1 million downloads and 60 million plays. The company says players are playing more than 5,000 matches a minute.


The topics range from Batman in arts and literature to Elton John in music. The game is free-to-play, but players can purchase in-app items known as XP Boosters. The boosts last for an hour and range in price from $1.99 to $5.99.


QuizUp is targeted at casual gamers, trivia lovers, bar trivia enthusiasts, academics, and anyone who loves to be right. Plain Vanilla Games was founded in 2010 and competes with Trivial Pursuit, RivalMe, Trivia With Pals, Social Trivia, ExQuizIt, and Sporcle.


“We anticipated the run-away organic growth of Plain Vanilla’s QuizUp app even before it launched. It was obvious to us that there were no similar apps on the market with this level of depth and virality,” said Mathias Schilling, eVentures cofounder and managing partner. “QuizUp is simultaneously addictive and educational, with 250 topics ranging from sports to the arts. We believe Thor and his team will make a substantial impact on the market.”

Peter, Iceland24
December 2013

Thousands of Passwords and SMS Online after Hacking Vodafone Iceland

The website of Vodafone telecommunications company in Iceland was hacked earlier this weekend, exposing 30,000 user passwords and 80,000 text messages as well as other confidential customer data such as addresses, visir.is reports.


The messages ranged from personal messages between individuals to sensitive information between MPs and senior policy makers.

Vodafone urges customers who may be using the same passwords on other sites to change them. All passwords on vodafone.is have been rest, according to a statement from the company.


Statement from Vodafone Iceland (www.vodafone.is)

Vodafone Iceland urges all customers who have identical passwords on other services (such as webmail or social media) to their 'My Vodafone' (Mínar síður) account on vodafone.is to change the password on the relevant sites.

This is to ensure that data obtained by a foreign hacker can not be used to gain access to other sites.

All passwords on Vodafone Iceland's website have been reset, users will be prompted to set a new password when service resumes.

Source: Icelandreview
Iceland24, Diciembre 2013

60 Persons Lose Jobs at RÚV (Icelandic National Broadcaster)

Sixty people will lose their jobs at RÚV, Iceland’s National Broadcaster, in cost cutting measures, as announced yesterday morning. Thirty-nine people have already received notice. Ríkisútvarpið, RÚV (english: "The Icelandic National Broadcasting Service") is Iceland's national public-service broadcasting organization.
Minister of Finance Bjarni Benediktsson said during question time in parliament yesterday that his thoughts were with those who had lost their jobs but that RÚV is “like any other government institution, indeed we are talking here about a public limited company in that costs need to be rationalized.”


Head of the Association of Broadcast Journalists Hallgrímur Indriðason told visir.is that the broadcaster had gone through three such layoffs since 2008 but that people had hoped that such cuts had come to an end.


Director of RÚV, Páll Magnússon, stressed that the station would continue to provide the best service possible. They will reduce annual operating needs by 500 ISK million.

Operating from studios in the country's capital, Reykjavík, as well as regional centres around the country, the service broadcasts a variety of general programming to a wide audience across the whole country via radio channels Rás 1 and Rás 2, and one television channel.

Source: Icelandreview
Iceland24, November 2013

Iceland has the highest rate of antidepressant use in the world

Rich, developed countries are consuming an average of 10% more antidepressants than about a decade ago, according to a report released on Nov. 21 from the OECD.


The increase has a lot to do with growing awareness about depression, which in turn has made treating the illness with drugs more socially acceptable. Big spikes in a few standout countries, the report says, may also “be linked to the insecurity created by the financial crisis” (pdf p.102). In Spain and Portugal, consumption rose 23% and 20% between 2007 and 2011, respectively. The UK’s rate doubled between 2000 and 2011.

The highest antidepressant-consuming country in the world? Iceland, where all three of the country’s main banks failed early on in the crisis. At almost twice the OECD average, its antidepressant consumption rose almost 50% over the observed period to 106 doses a day for every 1,000 people. (Some academics think Icelanders may consume more antidepressants because alternative treatments like psychotherapy aren’t as popular.)


Ironically, the country is now considered model of recovery in Europe, since its economy is growing faster than others in the region thanks in part to a rebound in fishing and tourism. And yet Icelandic households are still wallowing in debt and shrinking salaries. The country’s current estimated rate of depression—between 15% and 25% of its residents are expected to experience depression at some point—is hardly model behavior.

Lack of Sunlight Saving in Iceland Factor for Depression?

Guðmundur Löve, head of the Icelandic Association of Tuberculosis and Chest Patients, believes that the fact that Iceland does not observe daylight saving like other European countries is one of the contributing factors for high rates of depression in the country.


Source: Quartz
Iceland24, November 2013

FIFA World Cup: Croatia - Iceland

The feeling at the final whistle of the first leg was completely different, depending on which side you were supporting. For Croatia supporters, it was pure frustration; your team is the heavy favorite over a tiny country who has never been this far.


It is difficult to play on the road mind you, but still, this is Iceland, who is not known for their football. On top of that, you have one of the best midfielders in the world in Luka Modrić, and at striker, you have a Champions League winner in Mario Mandžukić.

On the other side, it was a combination of jubilation and relief as Iceland held on at home for the 0-0 draw. The Iceland squad showed just how bad they wanted to win this playoff series, having been dealt two major blows to their hopes. Just before halftime, Ajax striker Kolbeinn Sigþórsson had to be stretchered off the field due to injury, but there was not need to worry, as he was replaced by legendary Iceland footballer Eiður Smári Guðjohnsen.


The worst came in the 50th minute when right back Ólafur Ingi Skúlason was shown a straight red card on a challenge from behind. Iceland proceeded to play with 10 men for the final 40 minutes, and somehow managed to come away with a draw.

Iceland 0- Croatia 0 (game one)


Iceland to Make History Tomorrow?

“The journey was comfortable and it was great to be able to fly directly,” Lars Lagerbäck told vísir.is yesterday once he and his team had settled in to their hotel in Zagreb, Croatia. Tomorrow the two nations will compete for a place in the 2014 Brazil World Cup.


Croatia is the better team and they are at home, while Iceland is dealing with injuries, cards and the hostile Zagreb crowd.

Iceland24 prediction: Iceland 1, Croatia 1 (Series Tied 1-1, Iceland wins via the Away Goals Rule and advances to the World Cup)

Hildur, Iceland24
November 2013

Miss Iceland 2013 - Exclusive VIDEO

Global Social News Network Vocative did a video story on the Miss Iceland 2013 beauty pageant. They make  fun of the whole thing, while interviewing contestants and Icelanders that are against beauty contests.


Vocative wrote:

When we learned there wasn't going to be any press coverage of the Miss Iceland pageant this year, we were heartbroken. (Wasn't everybody?) So we did what any fledgling news team would do—if they also happened to be in Reykjavik. We got ourselves a world exclusive.

Watch our—once again, exclusive—coverage: Behind the scenes at Miss Iceland 2013, where stunningly beautiful women bravely compete for glory in the face of public outrage.


History of Miss Iceland

The competition has been carried out since 1950; in the first year it was called Miss Reykjavík (Ungfrú Reykjavík). Since 1955, the contest has taken place under the current name Miss Iceland.

In the past, contest winners gained the right to represent Iceland in Miss Universe, Miss World or Miss International. As of 2009, the winner goes on to compete in Miss World. Runners-up go to Miss Universe, Miss International and Miss Earth. There are six regional preliminary contests in each of the five rural regions and in the capital Reykjavík. 20 to 24 candidates, three to four from each region, take part in the finals.



Iceland is one of the most successful countries at the Miss World pageant with three victories, a record for a nation with a population of less than half million people. The current owner of the pageant is Arnar Laufdal Ólafsson.

Peter, Iceland 24
November 2013

Drive Safely in Iceland

Drivers should take care at this time of year, roads can be icy, even around Reykjavík area. All highland roads are now closed due to snow.

Drive Safely in Iceland

Search and rescue teams picked up tourists in two rental cars stuck in snow yesterday. Two women were stuck at Uxahryggjaleið road, West Iceland, in a small car. The road (number 52) is a mountain road from Þingvellir National Park to Borgarfjörður and is currently closed. Even during the summer, a 4x4 vehicle is recommended.

The second incident occurred on road 435, from Reykjavík to Lake Þingvallavatn, when two men got stuck in snow in a small SUV. After repeated attempts at freeing the car, the vehicle was left undrivable, visir.is reports.

Drive Safely in Iceland

Before heading out on a road trip in Iceland visit www.vegag.is for up to date road conditions and vedur.is for weather.

Driving in Iceland

Most mountain roads and roads in the interior of Iceland have a gravel surface. The surface on the gravel roads is often loose, especially along the sides of the roads, so one should drive carefully and slow down whenever approaching an oncoming car. The mountain roads are also often very narrow, and are not made for speeding.

Drive Safely in Iceland

The same goes for many bridges, which are only wide enough for one car at a time. In addition to not having an asphalt surface, the mountain roads are often very windy. Journeys may therefore take longer than expected.

For information on road conditions, Tel.: +354-1777, daily 8:00-16:00. www.road.is

The total length of the Ring Road around Iceland (national highway) is 1.339 km. The general speed limit is 50 km/h in urban areas, 80 km/h on gravel roads in rural areas, and 90 km/h on asphalt roads.

We recommend you read:

Car Rental in Iceland
Camper Rental in Iceland
Speed Tickets in Iceland

Peter, Iceland24
November 2013

Lopapeysa, the Icelandic sweater

The Icelandic lopapeysa is dear to Icelanders and visitors alike. They can be seen all over, both in the city and the countryside as they are worn by an eclectic bunch.


They provide warmth to young children at play, hip teenagers trying to look cool and old fishermen battling the cold. The lopapeysa is both beautiful and practical, the unique wool used to make it, called lopi, has insulation abilities and repels water as well. This is thanks mainly to the sheep who provide it, having been isolated in Iceland since the first Vikings arrived to the island.


The pattern used to adorn the Lopi sweater is traditionally most prominent around the neck and shoulder area, with details at the bottom around the hips and around the cuffs. The pattern has developed through time and today there are several versions and the colors used vary as well.


The history of the lopapeysa is surprisingly not a long one, with the first sweaters appearing in the 50's. The original designer is not known, and generally people believe it must have been a group if women knitting together rather than just one person. The original colors of the lopapeysa were not the typical ones used today, which consist mainly of earthy colors like white, brown, black and grey. Back in the 50's and 60's when these sweaters first appeared it was considered more stylish to dress in vibrant colors that did not resemble the colors of sheep. It wasn't until a bit later when tourists began to show interest in the lopapeysa that the natural toned colors became popular.


In recent years a controversy arose over the legitimacy of some of the lopapeysas being sold. It was discovered that some producers were outsourcing work to China, without clearly marking their product as being produced outside of Iceland. Many claimed that the sweaters produced on foreign territory were fakes and should be avoided when purchasing aiming at authentic lopapeysa. This begs the question, what makes a lopapeysa the real deal? Is it the lopi, the color, the pattern, or perhaps even the nationality of the person who made it? The answer to this is unclear, though one thing is for sure, the lopi and the pattern on the round at the shoulders must be present.


In recent years the lopapeysa has gained popularity on the home front, due most likely to the financial crash. The crash prompted a surge of national pride. People felt nostalgic for a simpler time in Icelandic history, a time when we were farmers, fishermen and peasants. Post 2007 the lopi sweater was everywhere, being worn downtown by people of all creeds and by frequently visible on Dorrit Moussaief, Iceland's first lady.


Before this shift in fashion the lopapeysa was generally not seen on a day to day basis. Their use was reserved for national festivals like independence day and cultural night and during gatherings in the country side and camping trips.

Nowadays, thanks to the popularity of this beautiful sweater, they are widely available for purchase all over the city of Reykjavík, and all other towns of Iceland.


If you enjoy knitting and want to create your own lopapeysa the first step is to buy the lopi wool. It can be purchased at all knitting stores and in some tourist shops. You could even make a day of it and take a trip to the historical Álafoss store. It is located in the town of Mosfellsbær, a twenty minute drive from Reykjavík. Álafoss began producing wool in 1896, there is even a type of wool named after it, the Álafoss lopi, which is often used when knitting a lopapeysa.

So, wether you want to stay warm, look good or perhaps try your hand at knitting the lopapeysa is a must have for all.

Source: Planiceland
Iceland24, October 2013

It's Official: Iceland Is The Best Place In the World To Be a Woman

For five years in a row, Iceland has been rated the country with the world's smallest gender gap by the World Economic Forum (WEF). The rating means Iceland is the country where women enjoy the most equal access to education and healthcare. It is also where women are most likely to be able to participate fully in the country's political and economic life.


Iceland is joined at the top of the The Global Gender Gap Report, 2013 by its Nordic neighbours Finland, Norway and Sweden. Overall, the gender gap narrowed slightly across the globe in 2013, as 86 of 133 countries showed improvements. However, "change is definitely slow", says one of the report's authors, Saadia Zahidi.


Explore the maps below to find out how countries compare overall - as well as in key areas of daily life, such as in health, education, employment and politics.

Overall gender gap

Europe has seven countries in the top 10. The UK is 18th and the US is 23rd.The Philippines, at fifth, is the highest ranking Asian nation and Nicaragua is the highest-placed country from the Americas, at 10th.


The G20 group of leading industrial nations has no representative in the top 10, nor do the Middle East or Africa.

Top countries

1. Iceland
2. Finland
3. Norway
4. Sweden
5. Philippines
6. Ireland
7. New Zealand
8. Denmark
9. Switzerland
10. Nicaragua


In short: It's awesome to be a woman if you're in Iceland. In Yemen, not so much.

Source: bbc.co.uk
Iceland24, October 2013

One in 10 people will publish a book in Iceland

Iceland is experiencing a book boom. This island nation of just over 300,000 people has more writers, more books published and more books read, per head, than anywhere else in the world.


It is hard to avoid writers in Reykjavik. There is a phrase in Icelandic, "ad ganga med bok I maganum", everyone gives birth to a book. Literally, everyone "has a book in their stomach". One in 10 Icelanders will publish one. "Does it get rather competitive?" I ask the young novelist, Kristin Eirikskdottir. "Yes. Especially as I live with my mother and partner, who are also full-time writers. But we try to publish in alternate years so we do not compete too much."

Special saga tours - saga as in story, that is, not over-50s holidays - show us story-plaques on public buildings.  Dating from the 13th Century, Icelandic sagas tell the stories of the country's Norse settlers, who began to arrive on the island in the late 9th Century.

Sagas are written on napkins and coffee cups. Each geyser and waterfall we visit has a tale of ancient heroes and heroines attached. Our guide stands up mid-tour to recite his own poetry - our taxi driver's father and grandfather write biographies.  Public benches have barcodes so you listen to a story on your smartphone as you sit.


Reykjavik is rocking with writers. It is book festival time. Man Booker Prize winner Kiran Desai and Generation X author Douglas Coupland rub shoulders with Icelandic literary superstars Gerdur Kristny and Sjon. Sjon also pens lyrics for Bjork, Iceland's musical superstar.

"Writers are respected here," Agla Magnusdottir tells me. "They live well. Some even get a salary."  Magnusdottir is head of the new Icelandic Literature Centre, which offers state support for literature and its translation. "They write everything - modern sagas, poetry, children's books, literary and erotic fiction - but the biggest boom is in crime writing," she says.

That is perhaps no surprise in this Nordic nation. But crime novel sales figures are staggering - double that of any of its Nordic neighbours.


So what has led to this phenomenal book boom? I would say it is due to a crop of darn good writers, telling riveting tales with elegant economy and fantastic characters.

Iceland's black lava riverbeds, its steaming, bubbling earth, with its towering volcanoes and fairytale streams also make it the perfect setting for stories.  No wonder JRR Tolkien and Seamus Heaney were entranced and Unesco designates Reykjavik a City of Literature.


Solvi Bjorn Siggurdsson, a tall, Icelandic-sweater-clad novelist, says writers owe a lot to the past. "We are a nation of storytellers. When it was dark and cold we had nothing else to do," he says. "Thanks to the poetic eddas and medieval sagas, we have always been surrounded by stories. After independence from Denmark in 1944, literature helped define our identity."

Siggurdsson pays homage to Iceland's Nobel Literature Laureate, Halldor Laxness, whose books are sold in petrol stations and tourist centres across the island. Locals name their cats after Laxness and make pilgrimages to his home.

"When Laxness won the Nobel prize in 1955 he put modern Icelandic literature on the map," Solvi tells me. "He gave us confidence to write."

Source: BBC News
Iceland24, October 2013

Yoko Ono Made Honorary Citizen of Reykjavík

Mayor of Reykjavík Jón Gnarr  nominated artist Yoko Ono as Honorary Citizen of Reykjavík today at a special ceremony at Höfði. Ono is currently in Reykjavík for the lighting of the Imagine Peace Tower.

The City Council Executive Committee of Reykjavík agreed unanimously last week to make Ono an honorary citizen of the city.

With the title, Reykjavík City Council wants to thank Ono for her “extremely valuable contribution to Reykjavík and for her lifelong work as an advocate for world peace and human rights and for choosing Reykjavík as a platform from which to spread her message,” as stated in a press release.


“Yoko’s contribution to peace and human rights issues in the world is unique. Imagine Peace Tower has been immensely valuable for Reykjavík,” Jón said.

Ono said it was an honor to receive the award. “It is indeed a great honor. John and I believed in Nutopia, which would make all of us citizens of the world. But inside the world, there is a land of our hearts that is shining with warmth, truth and beauty, called Iceland. Each time I visit the land, I am reminded of what is essential and therefore most important in life,” she said.


The basic idea of the Imagine Peace Tower is drawn from the common and intertwined careers of Ono and her late husband John Lennon and is about the international message of peace delivered through arts.


The Imagine Peace Tower was built on Viðey island in 2007 with support of Reykjavík City. The tower shines every year from Lennon’s birthday until December 8, the day of his passing in 1980. Ono joins a list of four other honorary citizens of Reykjavík: reverend Bjarni Jónsson (1961), ophthalmologist Kristján Sveinsson (1975), former President of Iceland Vigdís Finnbogadóttir (2010) and Icelandic artist Erró (2012).

Source: Icelandreview (www.icelandreview.com)
Iceland24, October 2013

Treasury Budget proposal in Iceland 2014

The Treasury Budget proposal for 2014 provides balanced Treasury operations for the first time since 2007. Stopping debt accumulation and achieving balanced public sector finances are the foundations of resilience.


The key objective of the budget proposal is to ensure improved living conditions for the people of Iceland. Real disposable income will rise by 0.3% in 2014 as a result of lower taxes. In addition, pensioners will benefit from increased social security system expenditures.

Over the next three years, the payroll tax will decline by 0.34 percentage points, providing firms with relief in the amount of ISK 3.8 bn by the time the changes have been implemented in full. In the long run, the payroll tax reduction will be of benefit to wage earners and will stimulate investment in the Icelandic economy.


The main element of fiscal policy is to reduce government debt, thereby reducing interest expense. The outlook is for a fiscal deficit of ISK 31.1 bn this year. This is substantially in excess of the estimate for 2013, which assumed a deficit of ISK 3.7 bn.

In the absence of targeted action, the fiscal deficit would have totalled some ISK 27 bn in 2014. Government expenditure will be reduced as a share of GDP through broad-based streamlining measures, decisions to abandon various recent projects undertaken by the previous government, and measures to cut interest expense.


Operating performance will also be improved through revenue-generating measures – in particular, the bank tax, which will be increased and will be imposed for the first time on financial undertakings in winding-up proceedings. Payments made by firms in winding-up proceedings will total an estimated ISK 11.3 bn in 2014, and total payments will amount to ISK 14.2 bn. This provides some scope for changes in focus, in line with the new government's policy.


Increased support for pensioners and safeguarding of children's benefits and interest cost rebates

  • The budget proposal provides for ISK 5 bn in increased disbursements to recipients of old age and disability pensions and to social assistance programmes, due to various changes in these pensioners' entitlements. 
  • Social security system disbursements will increase by an additional ISK 3.4 bn next year because of an increased number of benefit recipients and indexation of benefits. Spending in this category will therefore rise by a total of ISK 8.4 bn. 
  • The increase in interest cost rebates for low-income homebuyers, which was due to expire at the end of the year, will be extended. 
  • The recent increase in children's benefits is protected, in line with the government's policy of supporting families with children. Children's benefits rose by 24% in the 2013 Treasury Budget. Total expenditures for children's benefits are estimated at ISK 10.2 bn in 2014, as opposed to just under ISK 7.5 bn in 2012.


First steps away from increased taxation on individuals and companies 
  • The tax rate in the middle income tax bracket will be reduced by 0.8%, bringing it closer to the lowest bracket.
  • The combined percentage of employers' payroll tax and Wage Guarantee Fund contributions will decline by 0.1 percentage points. It will be cut by an additional 0.1% in 2015 and another 0.14% in 2016. 
  • The tax-free threshold for financial income tax on individuals' interest income will be raised by 25%, from ISK 100,000 to ISK 125,000. 
  • Value-added tax on disposable paper diapers will be reduced from the general rate of 25.5% to the lowest rate, 7.0%.


Further measures to assist households 
  • The ceiling for maternity/paternity payments leave will be raised to ISK 370,000, but plans to lengthen maternity/paternity leave will be abandoned. 
  • The “Allir Vinna” programme providing for reimbursement of value-added tax on labour related to construction and renovation of residential, vacation, and municipality-owned housing, which was due to expire at year-end 2013, will be extended. 
  • The tax-free threshold for children's income will be raised from ISK 104,745 to ISK 180,000.
  • Stamp fees on loan documents will be cancelled.


Contributions to various investment projects 
  • Norðfjarðargöng tunnel 
  • Bakki investment in infrastructure and road construction 
  • Vaðlaheiðargöng tunnel 
  • Prison construction at Hólmsheiði
  • General transport construction projects
Source: Ministry of Finance
Iceland24, October 2013