Denmark's New Coalition Unveils Tax Cuts, Free Transit

(MENAFN) Denmark's newly formed coalition government rolled out its comprehensive policy agenda on Tuesday, centering on sweeping tax reforms, expanded public welfare benefits, and tighter restrictions on children's access to social media.

Broadcaster DR first revealed the framework after four parties — the Social Democrats, the Socialist People's Party (SF), the Moderates, and the Danish Social Liberal Party — struck a coalition deal under the leadership of Prime Minister Mette Frederiksen.

On taxation, the government intends to dismantle both the top-top and middle tax brackets, replacing the current structure with a straightforward basic rate covering annual earnings up to 777,900 Danish kroner ($121,157), alongside a 15% top tax applied to all income exceeding that threshold.

The revenue shortfall created by eliminating the top-top tax will be offset through a newly devised mechanism dubbed the "principal shareholder model," designed to align the marginal tax burden on major company shareholders more closely with that shouldered by high-income earners. Additional tax increases elsewhere will further subsidize the broader package of cuts.

On the welfare front, the coalition plans to extend free public transportation to all children and young people up to age 22, while also proposing to cut VAT on all food products in half and eliminate it entirely on fruit and vegetables. Fuel taxes on gasoline and diesel, however, will remain untouched despite pressure from multiple parties — with the government opting instead to raise the commuting tax deduction.

Regarding child safety online, the coalition confirmed it will enforce a minimum age of 15 for social media access, honoring an agreement reached the previous year. Notably, it moves further than its predecessor by scrapping a clause that had previously allowed parents to grant exemptions for children as young as 13.

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