Investments rather than tax breaks in Tórshavn

05.09.2018 - 08:22
Investments rather than tax breaks in Tórshavn
Tórshavn Municipality’s finances are so strong that it may be difficult to spend it all in a sensible manner, according to the Economic Council
Annika Olsen, mayor of Tórshavn.

Tórshavn Municipality has enjoyed steady growth in its finances in recent years.

Last year, the municipality had a total income of DKK 970 million, which is almost DKK 100m more than it had budgeted for.

“It is no secret that things have been going incredibly well for us in the past few years,” said Mayor Annika Olsen.

Tórshavn Municipality appears to be in a special position, according to the Faroese Economic Council, which published its autumn report today.

The tax income is so large that it may become difficult to spend all the money sensibly. The new report suggests that instead of investing all the money straight away, the City Council ought to consider lowering its council tax rates.

But Mayor Olsen disagrees, saying that the money will be spent on construction work. There is a need for a new nursing home and a new day-care centre. The infrastructure also needs to be brought up to date, and the council is planning significant investments into sports facilities in the capital.

The Economic Council argues that despite the need for such heavy investments, there should be enough money for tax breaks, to which the mayor replied:

“I’m not sure the Economic Council is fully up-to-date with the scope of our planned construction work. And it is all work that needs to be done here and now.

The population in Tórshavn Municipality has increased by 1,500 people in the past five years, and last year alone, 76 children below school age moved to the capital region.

“That is the equivalent of a new day-care centre – and that’s only the figure for 2017,” said Olsen. “Yes, our finances are very strong, but this growth also creates an urgent need for major development work.”

Faroese municipalities are obliged by law to spend their tax income rather than putting it aside for future use. This requirement is made to prevent local councils from raising the tax rates more than necessary.

The Economic Council argues that when the tax income is as high as it currently is in Tórshavn, the prioritisation of municipal investments can end up becoming more random than it ideally should.

However, Mayor Olsen insists that there is no reason to worry.

“Tórshavn City Council would never consider making random investments. Every single one is sorely needed,” she said, adding that if the City Council were to be granted the authority to put funds aside for future use, she would definitely consider doing so.

“We have many urgent investments ahead of us, so we would not currently be able to stash away any significant amounts for future use.”

The council tax rate in Tórshavn Municipality stands at 19 percent.

Only Fugloy, Kunoy, Eiði and Skúvoy municipalities have a lower council tax rate.

Translated by

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