Sunday, June 9, 2013
Wednesday, August 22, 2012
Tax revenues have soared by ISK37.8bn (USD330m) while expenditures have only risen by ISK19.4bn (USD170m) as compared with one year ago for the small USD14bn Icelandic economy.
These figures are better than expected, and the country has cut its budget deficit from around 14% of gross domestic product (GDP) in 2008 to 2.3% of GDP in 2011 while also reducing its sovereign debt.
As compared with 2011, Iceland has especially collected significantly higher corporate income tax revenues. Value-added tax, property taxes and excise taxes on motor vehicles are also part of the reason why tax revenues have soared during the period, due to tax rises kicking in.
Following the 2008 financial crisis which brought Icelandic banks to their knees, the Icelandic government sought help from the IMF at a time when national banks needed to be saved, the country's deficit was at 14% of GDP and recession was threatening.
Under the bailout deal, Iceland committed to cut spending and it tightened its comparatively low corporate taxation, made the tax system more progressive by hiking taxes while safeguarding low incomes, and increased already high indirect taxes.
Thursday, July 5, 2012
Tuesday, March 6, 2012
Monday, March 5, 2012
My own perhaps ill informed opinion is that the buck stops with Bill Clinton, who forced US banks to loan to high risk borrowers, the better to give those without hope of ever owning their own home a leg up. This resulted in the banks developing arrangements where the impoverished need to pay little up front, and were offered the assurance that by the time their payments rose dramatically, they could sell for a profit. Beware the law of unintended consequences.
No one seems to have seriously considered the flaw in this arrangement, which was that (as with every pyramid scheme) eventually it would not be possible to sell houses for a profit, and the US would be left with a nation of debtors who were no longer prepared to make payments on that debt.
That said it may well be that the Icelandic government really was neither aware or particularly interested in the internal workings of their own banking industry. It is the wise person who checks for defects in a system before they manifest themselves. And given the economic prosperity that the banking sector offered Iceland, it would at the time have been perhaps seen as looking a gift horse in the mouth to question the source of that prosperity.
I am very grateful to my own federal government for its regulation of the Canadian banking system. While it almost certainly resulted in our banks being denied the opportunity to play roulette with our nations funds, it as certainly ensured that our banks never bought into the types of high risk debt that came close to derailing the US and British economy, and did derail the Icelandic economy.
Sunday, March 4, 2012
My concerns with the proposed "Arctic League" is that were I an American I would feel it very unfair to exclude Alaska from this league, while if I was a Russian, I'd feel that this was a western voting block designed to oppose or thwart Russia's claims in the Artic.
With Russia, and/or Alaska at the table, smaller nations might well feel intimidated, but they might find themselves potentially equally intimidated if absent Russia and/or Alaska at the table, either took offence at the existance of such an Arctic League.