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Danish government breaks economy policy deadlock with broad housing tax deal
May 3, 2017 / 12:35 PM / 7 months ago

Danish government breaks economy policy deadlock with broad housing tax deal

COPENHAGEN, May 3 (Reuters) - Denmark’s right-leaning minority government presented a broad housing tax deal with opposition parties on Wednesday, ending months of policy deadlock and paving the way for talks about labour market reforms and a long-term plan for the economy.

The compromise, which was agreed during negotiations late on Tuesday, has the backing of key right-wing government ally the Danish People’s Party, as well as the centre-left Social Democrats and Social-Liberals.

The deal aims to give tax relief to six out of 10 home owners, the government said, while those living in the most expensive houses, mostly in Copenhagen, could see their housing taxes go up.

Danish homeowners pay around 42 billion Danish crowns ($6.16 billion) annually in two types of housing taxes under the current system, which has long been criticized for being opaque and arbitrary and for increasing the risk of price bubbles.

“With the deal, a correlation between housing taxes and house values will be restored from 2022. It will at that time have a stabilising effect on housing prices and thus the economy,” central bank governor Lars Rohde said.

The government, which holds 53 of 179 seats in parliament, aims to gain support for reforms to expand the workforce to avoid that a shortage of workers in some areas dampens economic growth.

$1 = 6.8148 Danish crowns Reporting by Erik Matzen and Teis Jensen, editing by Terje Solsvik

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