Iceland's Tax Revenues Soar

The Icelandic Treasury has released its report on public finances during the first half of 2012, showing continuation of Iceland's dramatic recovery since the 2008 financial crisis.

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.

http://www.tax-news.com/news/Icelands_Tax_Revenues_Soar____56876.html

US Vendetta against Icelandic Member of Parliament

The US really seems to have a problem with the notion that their jurisdiction is or should be limited to the prosecuting of those who are either their own citizens, who commit crimes in their or other countries, or the citizens of other countries who commit crimes on their soil. It is utterly absurd to contend that those who reveal that the US war machine commits crimes, and then lie about them, as happened in the helicopter gunship attack on journalists, are themselves in any way party to a crime in thus causing some embarrassment to the US. Lies deserve embarrassment. Indeed one might instead argue that if those within the US responsible for prosecuting war crimes, which attacking unarmed civilians is (and which the US had clear video footage of) do not live up to their responsibilities to police their own, then it becomes the responsibility of all other nations, including Iceland, to bring such crimes to the light of day. Thanks, Iceland, and in particular Birgitta Jónsdóttir, for having the courage to do so. Evidence of a US judicial vendetta against WikiLeaks activists mounts

Young Conservatives Want to Legalise Drugs

It seems that conservatives in Iceland are more enlightened than those in Canada.

Young Conservatives Want to Legalise Drugs.

Iceland's ex-PM Geir Haarde tell court he is innocent

And so begins the blame game.

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.

The Arctic League

The proposal for an Arctic League is interesting because it echoes one of my arguments in favour of Iceland joining Canada.. specifically that it would make it easier for Canada through Iceland to become a member of the Nordic Nations with ties to Scandinavia, while making Iceland both geographically and politically central to such a cross Atlantic cooperative.

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.

Canadian Ecomists discuss the idea..

The comments on this blog (which discusses the adoption of the Canadian Dollar by Iceland) seemed pretty interesting.

Iceland and the Loonie

Canada ready to discuss letting Iceland share currency

In an interesting turn of events, it appears that Canada is ready to discuss letting Iceland use the Canadian Dollar as its internal currency.

http://www.icenews.is/index.php/2012/03/02/canada-ready-to-discuss-letting-iceland-use-its-dollar/

On the one hand immediate thoughts turn to the consequence of Europe permitting Greece to adopt the Euro as its national currency, and fears that Iceland might become to Canada what Greece has become to Europe. But Iceland is not Greece.

Iceland has a tiny population compared to Canada, and an industrious workforce, that has been self sufficient these last thousand years. While there perhaps might need to be checks and balances on borrowing, I don't see why including Iceland in the block that uses the Canadian dollar, should alarm anyone more than are already alarmed by the ability of each of the provinces of Canada to rack up provincial debt on that same Canadian dollar.

So presuming that Icelanders were shopping for a currency, what advantages would they derive from employing the Canadian dollar as their currency. Since the obvious alternative is the Euro, right now the Canadian dollar appears more robust. Buying into the Euro would implicitly mean buying into the bailout of Greece, and potentially other European nations with similar difficulties. Long term, I expect the Canadian dollar to continue to rise against the US Dollar.

The US is horribly over-extended, without seemingly the political will to address its deficit. As is said jokingly of the US, "a billion here, and a billion there, and pretty soon you are talking real money". In addition the US dollar derived much of its historic economic strength from being the defacto reserve currency which until recently nations tended to horde against some future rainy day. The days of the US dollar being a trusted currency given its recent collapse in value are over.


Love to know what Icelanders think about the preferred Icelandic currency.

Icelandic Economists argue for the Canadian Dollar over the Euro

cf:
http://www.afponline.org/Article_Detail.aspx?id=10737419422