The Danish government unveiled on Tuesday an economic long-term plan that aims to reach structural budget balance in 2025 thorough measures including tax and labor market reforms.
Entitled "Master Plan - for a stronger Denmark", the plan aims to boost economic growth and encourage 250,000 more people to join the labour market by 2025.
"It is a plan that can have significant importance for the next decade," Danish Prime Minister Lars Lokke Rasmussen said while presenting the plan.
"It will help to maintain the high confidence in the Danish economy and that we have the room for manoeuvre if new economic downturn comes." According to the plan, Denmark will reform the current tax system and public welfare schemes, providing better conditions for business, and limiting the refugees influx.
These measures are expected to double the fiscal room for manoeuvre from 12 billion kroner(1.80 billion U.S. dollars) to 24 billion kroner in 2020, reaching 57 billion kroner in 2025. As such, the government will increase public investment with a total of approximately 27 billion kroner by 2025.
The plan also proposed to allow public sector spending to grow by 0.5 percent annually until 2025, which equals to approximately 2.5 billion kroner extra per year.
While proposing a top tax reduction of five percentage points for those earning between half and one million kroner annually, the government also wants to cut taxes for low income earners.
Meanwhile, an increase in pension age, from 67 to 67.5 years, is scheduled to start in 2025, with early retirement age raising accordingly by six months from 63 to 63.5 years from 2021.
The new plan must be approved by a majority in Danish parliament, which means parts of it may have to be negotiated with opposition parties.
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