Taxation

Where few have too much and fewer too little.” N.F.S. Gruntvig, Danish pastor, philosopher and politician, referring to Denmark.  

N.F.S Grundtvig

This quote by a 19th century minister goes a long way in explaining the national psychology of Denmark. In contrast to North America, Scandinavia strongly adheres to the collectivist belief that a country’s prosperity is directly linked to the population as a whole and that a country has the moral obligation to ensure that its citizens are well cared for. 

Any country with a social welfare program as extensive as Denmark must fund it in some way and taxation is the great equalizer. For readers seduced by the overly rosy portrait I have portrayed until now, you may soon change your opinion. To Americans eating while you read this, I absolve myself of any legal liability should you choke on your food.  

Income taxes: The good news about Denmark is that individuals are not taxed on the first ~43,000DKK (~$7,700CAD/USD). The bad news is that additional income is taxed at 45% up to 423,00DKK ($75,600) and at 52% above this. Thus, an individual making 300,000DKK ($54,000) will pay approximately 31% in tax while someone making 600,000DKK ($107,000) will pay 41%.

Value-added tax: For those who survived the previous paragraph, consumables are subject to a value-added tax known as MOMS. Despite her name, MOMS is not so friendly, charging 25% on all consumables, including food. The upside (I’m trying to stay positive!) is that MOMS is incorporated into the advertised price. Thus, you won’t drive yourself mad trying to mentally calculate what you are going to pay AFTER taxes as in North America. There, I feel better already!

Vehicle tax: Still thinking of moving to Scandinavia? For those wanting to purchase a new car, vehicles are taxed at 180% in Denmark. Nope, that’s not a typo. You pay almost TWICE as much in tax as the value of the car. Thus, if you purchase a car costing the equivalent of $30,000, you will pay $84,000 after tax. Anyone care for public transit?

Of course, every vehicle owner needs to fill up their car with gas/petrol. At the moment, that will set you back approximately 11DKK per liter with approximately 40% of this being taxes. For Canadians, that’s $2.00/L while for Americans its…$7.60/gallon (the things I do for Americans…when are you going metric?).

Media Tax: For those owning a television (who doesn’t?), there is a mandatory media tax of 2,300DKK (~$410) per year to support state media. Although I typically am against such taxation, I don’t have as much of a problem with it in the case of smaller countries such as Denmark as these funds are the only way it is able to develop programming in its native language to counteract the bombardment by media from much larger countries.

Contentment: Despite the country’s high tax burden, Danes seem content with that fact as long as the money is spent wisely for the good of society. Indeed, the country frequently ranks as one of the “happiest” in the world with its Nordic counterparts and Canada typically joining in the top 10. While the “Happiness Index” may be somewhat of a joke to anyone who has ever ridden a bus in Denmark (everyone is so stern!), Danes do seem to be very content. Could it be that the general health and well-being of society as a whole are a greater driver of “happiness” than low taxes and individual wealth?

World's Happiest Countries 2010, BusinessWeek

The World's Happiest Countries 2010, Forbes

The following is an excellent 10 minute video done by the CBS program “60 Minutes” on Danish happiness a couple of years ago. They make reference to the extensive welfare state as well as the bus culture. 

http://www.cbsnews.com/video/watch/?id=4181996n&tag=related;photovideo

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About Canadianindenmark

A Canadian expat working in the biotechnology industry in Copenhagen, Denmark
This entry was posted in Overview of Denmark. Bookmark the permalink.

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