PROPERTY TAXES (2)

The new Danish Tax Minister is struggling to find a way out of the morass known as property taxes. At the moment, they are frozen, pending the introduction of a new system of valuation that citizens can trust. That new system has to be put in place by 1 January, otherwise the old system gets resurrected. Since, as I mentioned in my earlier post, that system is broken and widely mistrusted, time is short.

The ruling Social Democrats had hoped to do a temporary deal with the main opposition party Venstre, which (in effect) kicked the issue into touch for a couple of years; and in particular, beyond the date of the next election, which must be held before next September. That would have meant that neither party would have had to fight that election defending a new system that virtually every voter hated. However, Venstre demurred, not least because its likely coalition partners on the right want to make radical changes (i.e. cuts) to property taxes, which Venstre think are irresponsible. That in turn would have made coalition unity during the election campaign difficult, if not impossible.

So Venstre backed out. And, since the Social Democrats are in Government today, that means that they have to come up with a proposal. That proposal is also likely to continue the freeze in values, probably until 2018, together with some extra help for those with the cheapest houses. The relevant ministries will use the time to put together a more permanent solution. However, since the election seems likely to lead to a change of Government, it will be Venstre who have to pick up that ball.

As I say, property taxes are a morass, because they affect almost every voter. Devising a system that both raises money and keeps everybody happy is impossible. Which is why it was such a mistake not to maintain the old one rather better.

Walter Blotscher