VR Asked, and the Political Parties Responded

xB - Framsóknarflokkurinn (Progressive Party)

The economy is strong, and inflation is decreasing. However, Framsóknarflokkurinn emphasizes continued efforts to lower inflation in a prudent manner. This is our most important task at present, alongside reducing interest rates.
Framsóknarflokkurinn focuses on several measures to address economic challenges and support households bearing the heaviest burdens of inflation and high interest rates. These include:

1. Non-indexed housing loans with fixed interest rates:
   Framsóknarflokkurinn is working to establish the foundation for long-term non-indexed housing loans with favorable fixed interest rates, providing households with greater predictability and stability.
2. Reducing VAT on food:
   To reduce the cost of groceries, which form a significant part of household budgets, Framsóknarflokkurinn proposes lowering VAT on food.
3. Increased housing security:
   Emphasis is placed on ensuring housing security by increasing the supply of housing and plots, as well as introducing tax incentives for affordable housing.
4. Responsible economic management:
   Framsóknarflokkurinn believes that responsible economic management is key to reducing inflation and lowering interest rates, benefiting households and businesses alike.
   These measures aim to alleviate the financial burden on households and promote economic stability. Stability and lower inflation will best help improve the living standards of households across the country.

xC - Viðreisn (Reform Party)

Viðreisn places great emphasis on implementing measures to reduce inflation and thereby lower interest rates. Reducing the financial burden on individuals, companies, the state, and municipalities is critical to their overall financial health. Balancing the state budget is essential.

Viðreisn highlights improving state operations, reducing costs in procurement, downsizing institutions, and divesting assets to avoid cutting welfare spending. Measures that support these goals are prerequisites for the party's participation in government.

xD – Sjálfstæðisflokkurinn (Independence Party)

The most important task is to continue on the current path, which has already reduced interest rates and inflation, now at 5.1% and forecasted to drop to 4.5% in November. Avoiding disruption to this process will be crucial for household finances. In the coming months, the focus must be on labor market stability and continued fiscal restraint to cement stable prices and acceptable interest rates.

xF – Flokkur fólksins (People's Party)

Flokkur fólksins proposes a national housing initiative by opening new land and revising interest rate limits. We suggest building 8,000 apartments in Úlfarsárdalur in cooperation with Bjarg and Blær, labor movement housing associations, in partnership with the state and pension funds. A special infrastructure fund should be established to finance infrastructure development in the area. This approach would enable the construction of affordable apartments for purchase and rental at reasonable prices.

We also propose introducing a new housing loan system inspired by Denmark to ensure stability and predictability in the housing loan market, alongside banning inflation indexing on consumer loans. Equal risk-sharing between borrowers and lenders must be ensured so that the financial system benefits from stability and low inflation, rather than the opposite. Additionally, we advocate for creating a new social housing system inspired by Norway's Obos model.

For the rental market, we propose urgent measures such as rent caps and exploring solutions proposed by tenant associations regarding benchmark rental prices for housing. Immediate restrictions on short-term rentals to tourists and rapid construction of temporary housing using Icelandic modular homes designed by Bjarg are also necessary.

xJ – Sósíalistaflokkur Íslands (Socialist Party)

The most critical issue today is addressing the housing crisis. The Icelandic government has failed the public in many ways, but nowhere as severely as in housing. The housing market has been in complete disarray for a long time, primarily affecting those with the least resources while benefiting those speculating on apartments. Profit-driven landlords and short-term rentals to tourists through platforms like Airbnb have squeezed renters and first-time buyers to the point of creating a housing emergency. Immediate action is needed:

1. Large-scale social housing construction:
   Immediate construction of social housing to address the severe situation. Socialists propose building at least 4,000 apartments annually for the next three years, followed by sufficient construction each year to meet population growth and needs.
2. Prioritizing housing for residents:
   Newly constructed apartments must be allocated to residents, not speculative investors. Norway's model of imposing a fourfold property tax on second homes should be adopted.
3. Restrictions on short-term rentals:
   Only primary residences should be allowed for short-term rental (e.g., Airbnb).
4. Mapping and taxing vacant properties:
   Vacant properties should be identified and taxed to discourage long-term vacancies.
5. Modular housing:
   Modular housing construction should be undertaken to address the housing shortage.
6. Long-term social housing policy:
   A comprehensive strategy is needed to address Iceland's housing deficit.

xL – Lýðræðisflokkurinn (Democracy Party)

Balanced state budgets should be the rule, with exceptions only in limited circumstances.

Taxes and fees should be reduced as much as possible after streamlining government operations. The more taxpayers retain their earnings, the better.

All subsidies, except those for agriculture, should be eliminated. Tariffs that are not protective tariffs should be abolished.

Most state-owned enterprises should be privatized, except Landsvirkjun and Landsnet.

The state-subsidized system parties have shown they cannot be trusted to curb inflation. Inflation must be addressed immediately through balanced state budgets and a 20% reduction in state expenditure.

Lýðræðisflokkurinn will advocate for a statutory 4% ceiling on central bank interest rates and the removal of housing costs from the consumer price index.

xM – Miðflokkurinn (Centre Party)

Miðflokkurinn believes that a new government must commit to balanced budgets to signal sound economic management. Addressing state deficits and debt accumulation is essential to overcome inflation and lower interest rates, benefiting all.

xP - Píratar (Pirate Party)

Píratar have criticized the government's inaction on inflation in recent years. We propose measures to target the most inflationary areas of society rather than imposing high interest rates, which burden households.

We suggest increasing capital gains taxes and significantly lowering exemptions for capital gains from dividends and stock speculation while maintaining exemptions for interest income. Additionally, the tax environment for tourism should be revised to reduce inflationary pressures and enhance value creation in the industry.

Píratar propose increasing personal tax credits to support all households, along with raising interest subsidies, child benefits, and other welfare systems such as disability and old-age pensions. Finally, we emphasize strengthening the Competition Authority, which oversees Iceland's oligopolistic environment. We believe this will result in healthier competition and lower prices in the long term.

xS – Samfylkingin (Social Democratic Alliance)

For the past two years, Samfylkingin has advocated using state finances to combat inflation and high interest rates while supporting households bearing the heaviest burdens through interest subsidies and renter support.

Our housing and economic action plan for the next parliamentary term includes urgent measures to curb rising property and rental prices. These immediate measures involve stricter Airbnb regulations, facilitating modular housing construction, and repurposing unused commercial properties into quality apartments. We also aim to strengthen support for non-profit organizations like Bjarg and Blær and establish a unified housing support system under state management.

xV – Vinstri græn (Left-Green)

It is essential to address the effects of high interest rates on the public by introducing targeted interest subsidies and revising private pension saving schemes. Increased development of rental housing through grants and rent controls is also necessary. Housing should be for people, not investors. Tax breaks for selling secondary properties should be limited to benefit ordinary people, not investors. Further restrictions on short-term rentals (e.g., Airbnb) must be introduced. A genuine social housing system should be established in collaboration with the state, municipalities, and the labor movement, significantly increasing housing supply nationwide. The state must also support infrastructure development alongside increased land availability by municipalities.

xY – Ábyrg framtíð (Responsible Future)

The current inflation problem is rooted in past challenges, primarily the revenue loss from tourism during the COVID-19 pandemic, combined with government money printing and debt accumulation afterward. Unfortunately, the resulting funds have been exhausted, making inflation inevitable. The current high-interest rate policy has limited effectiveness and can at best delay inflationary spikes but at worst may cause more inflation by cooling housing development. Lower interest rates will likely lead to another inflationary spike. Between these two undesirable options, it is better to have inflation without high interest rates.

Housing prices could be significantly reduced, as real housing prices have doubled since the 2000s. This increase can partly be attributed to regulations leading to excessive luxury standards. Moreover, land scarcity policies tied to urban densification have raised housing costs. Returning to freer suburban development, as practiced in the past, can alleviate this pressure and bring housing prices back to previous levels.

xB - Framsóknarflokkurinn (Progressive Party)

Framsóknarflokkurinn emphasizes fiscal responsibility and considers it important to balance the state's finances. Reducing state interest costs is essential, as these funds could be better utilized elsewhere. However, the focus is not necessarily on budget cuts but rather on increasing state revenue through economic growth and value creation rather than raising taxes. This involves creating conditions for greater innovation and value creation, which can lead to increased state revenue without cutting services or investments in infrastructure.

Framsóknarflokkurinn also aims to ensure that investments in people and infrastructure continue responsibly and prudently. If budget cuts are necessary, they must be implemented in a way that minimizes their impact on essential services and the welfare system.

xC - Viðreisn (Reform Party)

Viðreisn underscores the importance of maintaining a balanced state treasury, ensuring that its operations align with the prevailing economic conditions. Welfare cannot be borrowed, but the party is committed to securing funding for welfare-related expenditures.

The government must place a much stronger emphasis on supporting economic management by reducing spending during periods of economic overheating and increasing investments when the economy slows down.

Interest expenditures by the state and municipalities are among the highest in Europe. VIðreisn is determined to change this.

These challenges will be addressed decisively by Viðreisn. This will be achieved by improving state operations and streamlining processes, reducing procurement costs, consolidating ministries and agencies, and divesting state-owned assets, such as Íslandsbanki, various real estate properties, and lands.
With this methodology, the party aims to prevent tax increases on wage earners and avoid cuts to operations and services in the welfare sector.

xD – Sjálfstæðisflokkurinn (Independence Party)

State expenditure will amount to approximately ISK 1,500 billion next year, among the highest in developed countries. Public funds must be better utilized without reducing services or investments, as is the case in all operations. For example, Sjálfstæðisflokkurinn has proposed reducing the number of institutions from 160 to 100 to decrease overhead. Additionally, funds could be freed by withdrawing the state from competitive industries such as banking and alcohol retailing, which private entities are fully capable of managing.

xF – Flokkur fólksins (People's Party)

We do not see the need for across-the-board budget cuts. However, we believe it is appropriate to reduce unnecessary state expenditures, such as purchasing expensive office buildings and the overuse of task forces within the government.

xJ – Sósíalistaflokkur Íslands (Socialist Party)

No, in general, there is a need to increase spending to address accumulated challenges and the inaction of the outgoing government. Spending on healthcare as a percentage of GDP must be increased incrementally, with a special focus on primary care, prevention, and elderly services. Comprehensive policy development is needed in this area, and the construction of nursing homes must be accelerated. Significant efforts are also required in transportation infrastructure. Socialists oppose profit-driven companies managing public services and road infrastructure paid for with tolls, as this is always more expensive in the long run than state management.

xL – Lýðræðisflokkurinn (Democracy Party)

Yes. We propose cutting approximately ISK 300 billion while protecting healthcare, social security, primary and secondary education, and law enforcement. Examples of cuts include funding for media, including RÚV, eliminating subsidies to political parties, restructuring grants for arts, sports, and youth initiatives, revising university funding, and eliminating climate and energy funds, among others.

xM – Miðflokkurinn (Centre Party)

Between 1980 and 2023, state expenditure grew much faster than GDP per capita, with almost every other krona being redistributed through the public sector. From 2015 to 2023, real state expenditure increased by 52%, likely a European record. Spending has grown significantly beyond inflation across nearly all areas of government, partly due to large-scale immigration. Significant increases in funding for ministry headquarters and various institutions, sometimes by 40–80% in real terms from 2015 to 2025, also indicate substantial administrative excess.

The number of state oversight agencies has grown to almost thirty, and their expenditures more than doubled between 2010 and 2018. This trend shows no signs of slowing, and the regulatory sector continues to thrive to the astonishment of many.

xP - Píratar (Pirate Party)

Píratar advocate for streamlining state operations through a digital transformation of public administration and major institutions, saving substantial funds and labor hours. We also propose a comprehensive review of various tax exemptions, estimated to total ISK 100 billion annually, to identify potential savings.

xS – Samfylkingin (Social Democratic Alliance)

Samfylkingin proposes revising public finance laws to include a stability rule ensuring balance between revenue and operational expenditures, adjusted for economic cycles. Current rules neither incentivize budget surpluses during prosperity nor allow for significant deficits during recessions. This has also resulted in neglected infrastructure maintenance. The new rule will exclude investments, both new projects and maintenance, ensuring that infrastructure funding is not compromised.

Samfylkingin believes that politicians have a duty to manage public funds responsibly and pursue efficient allocation. To this end, we propose internal audits for all major state institutions, commissioning international experts to draft a white paper on efficiency, and targeted investments in digital infrastructure to reduce long-term operational costs.

xV – Vinstri græn (Left-Green)

No. Vinstri græn rejects austerity as a strategy against inflation. Systematic inflationary pressures must be eliminated through coordinated efforts by the state, central bank, and municipalities.

xY – Ábyrg framtíð (Responsible Future)

Significant opportunities exist to cut public expenditure without affecting services to the public. For example, only 6% of traffic funds are allocated to conventional, sensible infrastructure like bridges, main roads, and intersections. The remainder is spent on extravagant projects like the Borgarlínan public transport line and complex tunnels. These projects could be resolved at a fraction of the cost.

Public projects are often poorly prepared, increasing costs and wastage, leaving taxpayers with less value for their money. We advocate for requiring independent assessments for all public projects exceeding ISK 100 million, a practice adopted in other Nordic countries, potentially saving tens of billions.

Within public administration, institutions often gain a life of their own, and over time, the system tends to prioritize its own maintenance over serving the public. It is crucial to ensure oversight and make institutions proportional to their services' scope and value to citizens. Public administration can therefore be streamlined significantly.

xB - Framsóknarflokkurinn (Progressive Party)

Framsóknarflokkurinn emphasizes securing state revenue by promoting economic growth and value creation rather than increasing taxes on general wage earners. This involves creating conditions for greater innovation, research, and development, which can lead to increased state revenue.

The party also supports public-private partnerships to expedite infrastructure projects and ensure national economic benefits. Furthermore, it advocates revising the state’s revenue system, for example, by implementing fees in high-traffic areas where infrastructure is costly. Framsóknarflokkurinn aims to ensure that investments in infrastructure, such as roads, healthcare services, and nursing homes, are carried out responsibly and effectively with secured financing. While no revolutionary changes are proposed, the party is committed to continued infrastructure development through value creation and a fair, pragmatic approach to the tax system.

xC - Viðreisn (Reform Party)

Viðreisn believes it is entirely realistic to improve state finances significantly without raising taxes. Instead, the party seeks to reduce costs and debt. It is firmly opposed to increasing taxes on general wage earners.

xD – Sjálfstæðisflokkurinn (Independence Party)

Sjálfstæðisflokkurinn does not intend to raise taxes but rather to lower them. It has proposed various measures, such as eliminating stamp duties for first-time homebuyers. To improve services, state funds must be utilized more efficiently, as previously mentioned. The party also advocates exploring public-private partnerships (PPPs), as is done widely in Nordic countries, to advance infrastructure projects. Additionally, fostering greater value creation in industries is necessary to increase the state’s fiscal capacity.

xF – Flokkur fólksins (People's Party)

Flokkur fólksins has pointed out the need to increase the banking tax and revise resource taxes. It also advocates revisiting tourism taxes, as the sector places significant strain on infrastructure. Combined, these measures could address budget deficits and create more room for infrastructure development. Another idea is to reassess when pension fund contributions are taxed, considering the infrastructure liabilities currently being passed on to future generations—a burden that will only grow if infrastructure continues to deteriorate.

xJ – Sósíalistaflokkur Íslands (Socialist Party)

Over the past three decades of neoliberal policies, the tax burden has shifted from corporations and high-income earners to low- and middle-income earners. Sósíalistaflokkurinn wants to reverse this trend. Billions of ISK can be obtained from high-income earners by taxing capital gains at the same rate as employment income. For instance, it is absurd that individuals living solely on capital gains pay nothing to their local communities through local taxes.

The party also plans to reclaim public resource rents from quota holders and introduce a moderate wealth tax. In return, tax exemptions for low- and middle-income earners can be increased. These measures would raise substantial funds from high-income and wealthy individuals, which could be used to build roads, strengthen healthcare nationwide, and construct nursing homes.

xL – Lýðræðisflokkurinn (Democracy Party)

Through the aforementioned spending cuts, along with selling state land and banks, Lýðræðisflokkurinn intends to lower all taxes, abolish tariffs that are not protective, and reduce various fees. Icelanders are currently an overtaxed nation.

xM – Miðflokkurinn (Centre Party)

Miðflokkurinn emphasizes the importance of diverse economic activity across the country. The party supports all forms of development and innovation to strengthen varied economic activities based on the nation’s resources and expertise. Along with a strong education system, this will ensure continued exports of high-tech products, an area where Iceland has already achieved notable success. These efforts, coupled with sensible efficiency measures, will fund the necessary projects.

xP - Píratar (Pirate Party)

Píratar do not see the need to increase taxes or fees on general wage earners. Instead, it proposes shifting the tax burden more heavily onto the highest earners in the country. This includes increasing capital gains taxes, resource taxes, and imposing additional taxes and fees on polluting industries.

Píratar also plan to significantly strengthen tax oversight, which they believe will yield substantial revenue for the state. Additionally, they aim to address unreported offshore assets.

xS – Samfylkingin (Social Democratic Alliance)

The tax burden on general wage earners has increased significantly over the past decade, as shown by data from the Tax Authority and Statistics Iceland. On top of this, households are now facing high-interest costs due to poor economic management. Samfylkingin opposes further tax increases on general wage earners. Instead, it emphasizes strengthening the state’s revenue streams through fair resource taxes and more equitable taxation of wages and capital. The party disagrees with those who advocate for Iceland's wealthiest 1% to pay much lower tax rates than the middle class. Additionally, there are opportunities to improve tax compliance and digitize tax administration further.

xV – Vinstri græn (Left-Green)

We do not wish to increase taxes or fees on general wage earners. Economic policy should aim to reduce inequality, with state revenue collection being fair and fostering societal cohesion, ensuring that the wealthiest contribute more. Capital gains taxes should be progressive, so that wealthy individuals pay a higher rate than ordinary people on modest savings. Tax oversight must be significantly increased, as tax evasion is estimated at ISK 100 billion annually. Those granted access to exploit the nation’s resources should contribute a larger share of their profits to public funds. Transparency in fisheries ownership should also be enhanced, and fishing fees for large-scale operators should be raised.

xY – Ábyrg framtíð (Responsible Future)

We advocate focusing on infrastructure projects that deliver the greatest benefits for the least cost. For example, instead of pursuing the Sundabraut project, we propose Laugarnesgöng, which would halve travel times out of the capital region and cost only a fifth of the current Sundabraut estimates. Such tunnels can be financed entirely through modest user tolls, as demonstrated by Vaðlaheiðagöng.

In healthcare, we support allocating funds directly to patients and increasing competition. Competition leads to efficiency and better use of funds. Additionally, we propose that healthcare expenses paid by individuals be tax-deductible, as health is of utmost importance. We also aim to improve ethical practices in healthcare, requiring documented informed consent from patients or close relatives for all treatments. Furthermore, drug pricing should be reviewed, ensuring fair prices for essential medications, particularly for conditions such as COVID-19, long COVID, and vaccine-related issues.

Under no circumstances would we support tax increases, as waste within the public sector is so rampant that expenditure reductions are easily achievable. Mismanagement, such as luxury subsidies for electric cars, has cost the state ISK 150 billion in lost tax revenue over the past decade. We generally oppose tax incentives that discriminate among car owners based on vehicle type. While such disparities have been reduced recently, they should be eliminated entirely.

We are also open to reviewing all consumer-targeted taxes, as these are essentially flat taxes that disproportionately affect low-income earners.

xB - Framsóknarflokkurinn (Progressive Party)

Framsóknarflokkurinn has not proposed specific measures to increase the powers of the State Conciliation and Mediation Officer or reduce the strength of unions. The party emphasizes the importance of maintaining good cooperation between labor market stakeholders and the government to ensure stability and fair collective agreements.

Collaboration and consultation among all labor market stakeholders are considered key to achieving solutions that benefit both workers and employers. It is crucial for all parties involved in collective agreements to approach negotiations positively and be willing to understand each other's perspectives. Reasonable and fair compromises are the most sustainable solutions in the long term.

xC - Viðreisn (Reform Party)

Viðreisn seeks close consultation with labor market stakeholders regarding potential changes to labor market structures and legislation, including the powers of the State Conciliation and Mediation Officer. Among the reforms we propose is ensuring that mediation proposals are put to a vote. For example, legislation could stipulate that if no vote occurs within a set timeframe, the proposal would automatically be considered accepted. Current laws require a majority of participants to reject the proposal, provided opposing votes exceed 25% of union members. Critics argue that the minimum participation requirement is overly burdensome for large unions like VR and Efling.

Additionally, in Nordic countries, mediators can postpone strikes to facilitate negotiations and reject cases if certain conditions are unmet. These options should also be explored further in collaboration with labor market stakeholders.

The Icelandic labor market model, like those in other Nordic countries, relies on strong unions with universal membership. Viðreisn sees no reason to weaken unions.

xD – Sjálfstæðisflokkurinn (Independence Party)

Legislation must ensure that the State Conciliation and Mediation Officer can submit mediation proposals for voting and strengthen their role in resolving labor disputes. Unions play an important role, and Sjálfstæðisflokkurinn supports individuals’ rights to pursue their interests through such organizations. However, individuals should also have genuine choices about which union best represents their interests.

xF – Flokkur fólksins (People's Party)

Under no circumstances should the powers of the State Conciliation and Mediation Officer be increased, particularly when it comes to imposing mediation proposals against the will of negotiating parties. The current unwritten rule regarding mediation proposals has worked well for decades, as such proposals are generally not submitted if opposed by one or both parties. Experiences in other countries show that limiting unions' strike rights invariably leads to worse living conditions for the public and increased inequality between workers and businesses. On the contrary, unions’ strike rights should be expanded, as strikes are no more frequent here than in comparable countries.

xJ – Sósíalistaflokkur Íslands (Socialist Party)

No, and no!

xL – Lýðræðisflokkurinn (Democracy Party)

The principle of free collective bargaining between labor market parties must remain intact. We oppose reducing the strength of unions.

xM – Miðflokkurinn (Centre Party)

Research shows that Iceland’s labor market is conflict-prone, with strikes and disputes more common than in neighboring countries. It is therefore essential to review labor market legislation regularly, with the role of the State Conciliation and Mediation Officer being central to this.

xP - Píratar (Pirate Party)

No.

xS – Samfylkingin (Social Democratic Alliance)

Samfylkingin opposes measures that would weaken unions and emphasizes that any changes to labor market legislation must be developed in close cooperation with the labor movement.

xV – Vinstri græn (Left-Green)

No.

xY – Ábyrg framtíð (Responsible Future)

Ábyrg framtíð prioritizes addressing the consequences of the COVID-19 pandemic to prevent similar crises from destabilizing the economy, legal systems, and public health. Given this priority, we would prefer not to interfere with current labor market arrangements. However, both sides must exercise their negotiation rights responsibly.

Please note that the names of the parties are translated into English by ChatGPT, as are the questions and answers.