Push to lighten Denmark tax burden

COPENHAGEN • Successive polls in Denmark have shown that voters in the country do not really like tax cuts. And lowering taxes for the rich is a political non-starter.

But the country's Finance Minister said such measures are actually the best way to protect Denmark's fabled social welfare model.

Mr Kristian Jensen, the 46- year-old in charge of the country's finances, will unveil a proposal to its Parliament later this month.

After a plan to cut the top marginal tax rate was killed in its infancy just days ago, the centre-right coalition will now push a broader package of measures that will lighten the total tax burden, Mr Jensen said on Wednesday.

Denmark boasts the planet's highest tax burden relative to gross domestic product. That revenue is used by the state to make sure Danes have universal access to free education, hospitals, childcare and elderly care.

But Mr Jensen said Denmark is now running out of workers because too many people are on welfare and more should be contributing to state coffers.

Economists earlier this month said there were already signs of bottlenecks building, echoing warnings from the central bank.

"Cutting taxes for top earners would undoubtedly have had a positive effect," Mr Jensen said.

But with that option no longer on the table, he said the goal is to find other ways to raise the labour supply via tax cuts.

"We need to use the good times we are experiencing now to drive down the number of Danes on welfare payments," Mr Jensen said.

"There are about 750,000 people receiving state aid and we have a unique opportunity to bring that number down."

The country has a population of of about 5.8 million. According to Statistics Denmark, the number of people on welfare totalled 729,233 at the end of the first quarter, down from 755,133 a year ago.

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A version of this article appeared in the print edition of The Straits Times on August 18, 2017, with the headline 'Push to lighten Denmark tax burden'. Print Edition | Subscribe