Greenlandic parliament in turmoil not only about finances
Last week the autumn session of the parliament opened in Greenland. Amid resignations and changes within the government, the first project presented, the new Finance Act, will not receive the support of the parties who are concerned about a possible VAT on the island.
With exits, resignations, absences, a change of presidency and two new ministers, the new session of Parliament was launched. At the government level, the Ministries of Foreign Affairs and Health will be led by Múte B. Egede, Head of Government of Greenland, who takes over from Pele Broberg, and Agathe Fontaine for Health, respectively. At the same time, the parliament, Inatsisartut, gets a new president with Mimi Karlsen. All three are members of Inuit Ataqatigiit, a party with a socialist orientation. The position of Minister of Fisheries also changes. Karl Tobiassen of the social democratic Siumut party resigned to join parliament, leaving this key position for the island’s economy to his political fellow Kim Kielsen, who is known for clear positions on the fisheries issue.
Parliament will also have had its share of changes, with the reshuffle notably leaving several empty seats. A game of bypasses criticized by the press and a situation which will not be without consequences on the decisions that the deputies will soon have to take on the various bills submitted by the executive.
As a reminder, Naalakkersuisut had tabled a number of bills for debate by Parliament at its forthcoming sessions. These include bills on finance, anti-discrimination, the cruise tax and the Inuit register, as well as proposals relating to the Paris Agreement, to which Greenland had postponed its accession.
While most of these projects will be discussed over the coming weeks, the Finance Bill for 2024 has already been presented on Tuesday, and the least that can be said is that this bill is far from winning support.
Submitted to the legislature by the Greenlandic government, it is not going down well with the parties. At issue are the forecasts for the sustainability of a budget surplus which, according to several MPs, cannot be guaranteed in the long term. In addition, the possibility of introducing VAT in the country has also been criticized.
With a positive growth rate and inflation expected to hover around 5% for 2023, the government has reported an operating surplus of DKK 91 million ( more than 12 million euros) for next year. This means that Greenland’s finances are in good shape, with a profitable budget thanks in particular to revenues from the fishing industry, which is doing well. According to Naalakkersuisut, these results should be repeated for the fiscal year 2024-2027, with a cumulative surplus of DKK 708 million (94 million euros).
These projections have not convinced the parties, who are skeptical about the sustainability of such a situation. Both coalition and opposition parties believe that the situation is unrealistic, and expressed this view on Tuesday in the columns of the Greenlandic newspaper Sermitsiaq. According to a calculation by the Greenland Economic Council, if nothing is done, public spending will eventually exceed revenues, resulting in an annual financing deficit of DKK 1.3 billion.
This is due to demographic change, the growing number of people excluded from the job market and the lack of revenue generated by new industries for the public coffers.
However, while the general parties are quick to criticise the project, several voices have already suggested investing the surpluses currently available in the economic development of the island and its infrastructure.
A VAT that worries
There were also a number of questions about the possibility of introducing a VAT system in Greenland. Currently, this does not exist on the island, which applies other types of tax on consumer goods, such as the packaging tax of DKK 3.50 (0.47 euro cents). Introduced recently, it is expected to generate DKK 100 million (13 million euros) for the Treasury. However, this tax continues to provoke the opposition social-liberal party Demokraatit, which tabled an amendment to the ordinance on returnable packaging.
Naleraq, also a center-opposition party, criticized the Finance Bill for its lack of vision, but also the possibility of introducing VAT to replace current taxes. An approach deemed “not very good” by Jens Napaatooq, Member of Parliament, who also wondered whether the same VAT rate would be applied in Greenland as in Denmark, where it stands at 25 percent, one of the highest rates in Europe.
The parties now have until 24 October to further discuss the finance bill. Additionally, the coming weeks will also see MPs debate further projects on the agenda such as the cruise tax and the Greenland register. The turmoil is very unlikely to recede in the coming weeks.
Featured image : Inatsisartut
Mirjana Binggeli, PolarJournal
More on the subject
