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

10 Icelandic Sagas you may not have heard of

Some of the richest and most interesting writings from medieval Europe come from one of its furthest corners: during the 13th and 14th century Icelanders began to write down the stories they had collected orally from previous centuries. These sagas would cover events in Iceland and elsewhere, going back to the days when the island was first discovered and settled back in the ninth century. They are stories of family feuds, outlaws and the occasional monster lurking somewhere the uninhabited stretches of the Iceland.

Many readers will know some of these Icelandic sagas, such as Egil’s Saga or Njal’s Saga, but the Icelandic writers penned dozens of these stories. Here are ten sagas that you may not have heard of, but offer a fascinating tale. All of these works are available in an English translation, but it maybe difficult to find a copy:

1. The Saga of Finnbogi the Strong – It follows the adventures of Finnbogi Asbjornson, a 10th century Icelander known for his great strength. It doesn’t look good for Finnbogi when his birth mother decides to abandon him shortly after he is born, but another family rescues the infant and raises him. As a child he begins to show his great strength – when Finnbogi 12 he breaks the neck of a bull, and a few years later he takes on a bear and breaks his back. In some ways the story is like Egil’s Saga, as Finnbogi faces various challenges in Iceland and Norway.

2. The Saga Of Gunnlaugur Snake’s Tongue - a classic love-triangle tale, where two men love the same woman. Being Icelanders they decide to settle it by a duel to the death. Click here to find the book on Amazon.com

3. Audun’s Story – a poor farmhand in Greenland decides to buy a polar bear and goes a journey to give it to the King of Denmark.

4. Magnus’ Saga – a short account of the life of St. Magnus, Earl of Orkney (1075-1116). Magnus is one of two earls who share rule over the Orkney Islands, but discord between them leads to battle, where Magnus is captured and executed. But that is the only the start of his story, as we read of the miracles performed by Magnus as he is declared a saint. There is also a longer account of his life.

5. Viga-Glums Saga – a struggle for power set in tenth-century Iceland, it features a ruthless chieftain named Glum who is determined to get his way, by legal means or by force. You can read a 19th century translation of this saga from the Icelandic Saga Database.

6. Heidarviga Saga – most of this story involves Bardi Gudmundson and the feud he has that gets more violent and leads to a bloody battle taking place on a moor in 1018. You can read a 19th century translation of ‘The Story of the Heath-Slayings’ from the Online Medieval and Classical Library.

7. The Saga of the Confederates – a kind of comedy saga, this story set in eleventh-century follows Odd and his father Ofeig. While Odd goes into business and becomes wealthy, his father remains a poor farmer. But when the  eight most powerful chieftains of Iceland come together in a confederacy so they can legally outlaw Odd and take his wealth for themselves, it is Dad who comes to the rescue, using his wits to get his son out of trouble. You can learn more about the saga from the thesis: The Saga of the Confederates: Historical Truth in an Icelandic Saga.

8. Gongu-Hrolfs Saga – a romantic saga, where a Russian princess is doomed to marry the man who killed her father unless a young Norwegian warrior can rescue her. This story has everything – sorcerers, demons, dwarves and legs that are cut off and sewn back on! And yes, he gets the girl. Read more about it in History or fiction? Truth-claims and defensive narrators in Icelandic romance-sagas.

9. Svarfdale Saga – set first in Norway and Sweden, and then the Svarsdale region of Iceland, it follows three generations of a family who have feuds and need to gain revenge for the wrongs done to them. Similar to other family sagas, historians haven’t been particularly interested in this work as it lacks the style found in works like Njal’s Saga. You can read some of the proverbs and quotes from this saga at this site, including lines like: ”Someone who loses his gloves cannot be happy even if he gets another pair.”

10. The Saga of King Hrolf Kraki – a mythic saga, it is the story of King Hrolf, the ruler of Denmark from the 6th century AD. Similar to Beowulf, this story has wizards, berserkers and several interesting female characters. Learn more and read some excerpts from the saga from The Viking Site by Jesse L. Byock.

Source: Medievalist
Iceland24, October 2013

Operational cost per student in primary schools in Iceland

Statistics Iceland has calculated the average operational cost per student in all primary schools that are run by local governments, according to paragraph 2 Article 56, Act No 66/1995 on Primary Schools and paragraph 6, Directive No. 320, March 26, 2007 on the accreditation of primary schools and the minimum contribution from local governments to such schools.

This calculation is done according to paragraph 2 in Article 6 of the aforementioned directive that states:

„The calculation made by Statistics Iceland according to paragraph 1 shall be available in September each year.  The calculation shall be based on the Annual Reports of local governments for the previous year, according to price changes until the day the calculations are done.  Calculation of price changes shall be done according to general rise in the wages of employees of primary schools and changes in the consumer price index allowing for the weight of each component in the operational cost of the primary schools.”

The average operational cost per student in primary schools in 2012 turned out to be 1,411,812 krona (8.625€ or 11.672 US dolars) and the increase in the weighted average price level from 2012 until September 2013 was estimated at around 3.9%.

The findings of the calculation are, therefore, that the estimated operational cost per student in primary schools that are run by local government is 1,466,718 krona (8.960€ or 12.126 US dolars)  in September 2013.

Source: Statistics Iceland
Iceland24, October 2013