Currently, Icelandic fishing companies pay a fishing fee amounting to 33% of profits, although this is only a part of their total taxes.
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In just three days, on Saturday, November 30, Icelanders are called to the polls. If recently the Minister of Food, Agriculture, and Fisheries, Bjarkey Olsen Gunnarsdóttir, announced its intention to increase fishing fees on some pelagic, now, during the election campaign, some candidates have proposed to double the fishing fee, which is currently 33% of fishing profits. The Icelandic dashboard of the fishing industry and aquaculture, Radarinn, has responded to the proposal by stating its opposition to the increase, pointing out the negative impact the measure would have on rural communities.
Last week, talking about how aquaculture has driven value creation in the Icelandic Westfjords, we said that, in Iceland, more than 80% of the people employed in aquaculture live in rural areas, and about 80% of the industry's revenues benefit the people who live there. We added that it is one of the few industries more widespread in rural areas than in the capital region.
The same is true for fishing. It is one of the few industries in the country that is more relevant in rural areas than in the capital region. However, unlike aquaculture, whose activity is concentrated in the East and West Fjords, in the case of fishing, there are strong enterprises in every region of the country. In fact, according to Radarinn, no other industry has such an equal distribution of labor income throughout the territory.
Statistics Iceland data on which Radarinn's analysis is based show that approximately 80% of labor income in fishing goes to individuals residing in rural areas, a proportion that has remained relatively stable since data has been available, this is, since 2008.
The Icelandic dashboard of the fishing industry and aquaculture also highlighted that the fiscal footprint of the fishing industry in 2023 is one of the largest in history. In its view, this is not because the amount of the fishing fee was the highest, but because the operations of the fishing companies generally performed well, the sector made good profits, and the wages of fishermen and fish processing workers increased.
"When companies perform well and generate profits, this translates into higher revenue for the state treasury. When wages increase, it benefits not only the workers but also the state treasury, municipalities, unions, and pension funds through wage-related taxes and fees," Radarinn states.
"If one goal of fisheries management is to strengthen rural areas, such a significant increase in taxation on rural communities would seem to contradict that objective," the Icelandic fishing industry representatives also claim.
Radarinn also highlighted that despite its importance and what it could mean, the fishing fee is only part of the "large tax footprint" of the Icelandic fishing industry which, moreover, depends entirely on its ability to compete in international markets, as approximately 98% of Icelandic seafood is sold abroad.
Within these markets, the analysis notes, even Iceland's largest fishing companies are relatively small, and many foreign competitors are several times larger than all Icelandic companies combined. In addition, says Radarinn, most of these foreign competitors enjoy public subsidies, grants, or tax exemptions that other industries must pay in their home countries.
In contrast, the Icelandic fishing industry does not receive any such special treatment at the national level and, moreover, pays this special fee for the use of resources, the fishing fee, which, the Icelandic fishing industry recalls, is almost non-existent in other countries.
"In the lead-up to parliamentary elections, this unique aspect of the Icelandic fishing industry is often overlooked. Discussions frequently focus entirely on the fishing fee, as if it were the only contribution the fishing industry makes to public funds," the analysis warns.
Radarinn adds that some also argue that the fishing fee can be increased significantly without affecting the industry's competitiveness but, its representatives counter, "It stands to reason that any increase in levies on fishing companies—or other export industries—undermines competitiveness when such levies are not imposed on foreign competitors."
In its reflection on the impact of a possible increase in the fishing fee, the Icelandic dashboard of the fishing industry and aquaculture recalls that fishing companies in the country pay tens of billions of Icelandic kroner in public taxes every year.
"They pay a fishing fee amounting to 33% of the profits from fishing. In addition, they pay corporate tax on profits, like other companies in Iceland. They also pay a 6.35% insurance contribution on employee wages, with a higher rate for seamen. A special insurance contribution for seamen amounts to an additional 0.65%, which is added on top of the regular insurance fee," Radarinn says.
To that, it continues, are added catch and harbor fees, carbon taxes, property taxes, pension fund contributions, and various union-related fees. All of these costs are part of the industry's fiscal footprint mentioned above, which encompasses all taxes and public fees generated by the value creation of fishing companies.
It is estimated that the fiscal footprint of the fishing industry amounted to approximately ISK 89 billion (EUR 612.5 million / USD 643.4 million) in 2023, of which, what was paid as fishing fee was approximately ISK 10 billion (EUR 68.8 million / USD 72.2 million).
Thus, according to the public taxes paid by the Icelandic fishing companies on their operations, the fishing fee accounted for about 20%. When measured in relation to the total fiscal footprint of the fishing industry, according to Radarinn's analysis, it accounted for approximately 11%.
All of the above refers only to the fishing companies themselves and not to related industries. But, the dashboard also recalls, that the fiscal footprint of these other companies - which include companies providing direct services to fisheries, or innovation and technology companies that use by-products of the catch, or develop high-tech equipment for handling or processing catches - also depends on the competitiveness of the Icelandic fishing industry.
"If included, the total tax footprint would be significantly higher, as these companies create substantial value for Icelandic society," the analysis says.
The Icelandic dashboard of the fishing industry and aquaculture's analysis also says that total company payments in fishing fees between 2019 and 2023 and labor income in fisheries during the same period reveal a similar pattern, that is, the vast majority of fishing fee payments - about 82% during this period - are made by companies in rural areas.
Therefore, about the possibility of doubling the fishing fee raised by some of the candidates in next weekend's parliamentary elections in Iceland, Radarinn concludes that "It is evident that such an increase, if implemented, would disproportionately impact rural areas compared to the capital region, where most people reside."
