Editing Economy of Denmark (section)

==Government==

===Overall organization===

Since a local-government reform in 2007, the general government organization in Denmark is carried out on three administrative levels: central government, regions, and municipalities. Regions administer mainly health care services, whereas municipalities administer primary education and social services. Municipalities in principle independently levy income and property taxes, but the scope for total municipal taxation and expenditure is closely regulated by annual negotiations between the municipalities and the [[Finance Minister of Denmark]]. At the central government level, the [[Ministry of Finance (Denmark)|Ministry of Finance]] carries out the coordinating role of conducting economic policy. In 2012, the Danish parliament passed a Budget Law (effective from January 2014) which governs the over-all fiscal framework, stating among other things that the [[structural deficit]] must never exceed 0.5% of GDP,<ref name=oecdgov>{{cite web| url = https://www.oecd.org/gov/budgeting/Denmark.pdf| title = Denmark. OECD Journal on Budgeting, Volume 2015/2,OECD 2016}}</ref> and that Danish fiscal policy is required to be [[fiscal sustainability|sustainable]],<ref>{{cite web| url = https://dors.dk/vismandsrapporter/dansk-oekonomi-foraar-2017| title = Danish Economic Council: Danish Economy, Spring 2017. English Summary |page=297 |date=24 May 2017}}</ref> i.e. have a non-negative fiscal sustainability indicator. The Budget Law also assigned the role of [[EU Independent Fiscal Institutions Network|independent fiscal institution]] (IFI, informally known as "fiscal watchdog"<ref>{{cite web| url = https://dors.dk/english| title = Danish Economic Councils. Information in English on website of Danish Economic Councils. |access-date=24 November 2018 |date=30 September 2014}}</ref>) to the already-existing independent advisory body of the [[Danish Economic Councils]].<ref name=oecdgov/>

=== Budget and fiscal position ===

Danish fiscal policy is generally considered healthy. Government net debt was close to zero at the end of 2017, amounting to DKK 27.3&nbsp;billion, or 1.3% of GDP.<ref name=netdebt>{{in lang|da}} [https://www.dst.dk/da/Statistik/nyt/NytHtml?cid=26666 Nyt fra Danmarks Statistik nr. 126, 23 March 2018. Offentligt kvartalsregnskab 4. kvt. 2017: Fortsat fald i den offentlige finansielle nettogæld.]</ref><ref>{{cite journal |url=https://www.oecd-ilibrary.org/governance/general-government-financial-wealth/indicator/english_325ddad1-en |title=General government financial wealth |doi=10.1787/325ddad1-en |doi-access=free |website=OECDiLibrary|year=2018}}</ref> The government sector having a fair amount of financial assets as well as liabilities, government gross debt amounted to 36.1% of GDP at the same date.<ref>{{cite web| url = http://statistikbanken.dk/edp3 |website=StatBank Denmark |title=Table EDP3: Denmark's EMU-debt and EMU-deficit by function (% of GDP) |access-date=24 November 2018}}</ref> The gross EMU-debt as percentage of GDP was the sixth-lowest among all 28 EU member countries, only Estonia, Luxembourg, Bulgaria, the Czech Republic and Romania having a lower gross debt.<ref name="edp2">{{cite web| url = http://statistikbanken.dk/edp2 |website=StatBank Denmark |title=Table EDP2: EU-countries, public finances by country and function (in % of GDP) |access-date=24 November 2018}}</ref> Denmark had a government budget surplus of 1.1% of GDP in 2017.<ref name=edp2/>

Long-run annual fiscal projections from the Danish government as well as the independent Danish Economic Council, taking into account likely future fiscal developments caused by demographic developments etc. (e.g. a likely ageing of the population caused by a considerable expansion of [[life expectancy]]), consider the Danish fiscal policy to be overly sustainable in the long run. In Spring 2018, the so-called Fiscal Sustainability Indicator was calculated by the Danish government and the Danish Economic Council to be 1.2% and 0.9% of GDP, respectively.<ref name=convergence>{{cite web| url = https://uk.fm.dk/publications/2018/denmarks-convergence-programme-2018| title = Denmarks Convergence Programme 2018. Website of Danish Ministry of Finance| date = 16 May 2018| access-date = 24 November 2018| archive-date = 25 November 2018| archive-url = https://web.archive.org/web/20181125031528/https://uk.fm.dk/publications/2018/denmarks-convergence-programme-2018| url-status = dead}}</ref><ref>{{cite web| url = https://dors.dk/vismandsrapporter/dansk-oekonomi-foraar-2018| title = Danish Economic Council: Danish Economy, Spring 2018. English Summary |page=242 | date = 14 May 2018}}</ref> This implies that under the assumptions employed in the projections, fiscal policy could be permanently loosened (via more generous public expenditures and/or lower taxes) by c. 1% of GDP while still maintaining a stable government debt-to-GDP ratio in the long run.

===Taxation===
{{Main|Taxation in Denmark}}

The tax level as well as the government expenditure level in Denmark ranks among the highest in the world, which is traditionally ascribed to the [[Nordic model]] of which Denmark is an example, including the [[welfare state]] principles which historically evolved during the 20th century. In 2022, the official Danish tax level amounted to 42.2% of GDP.<ref name=sktryk>{{cite web| url = http://statistikbanken.dk/sktryk |website=StatBank Denmark |title=SKTRYK: Tax level by national account groups |access-date=18 December 2022}}</ref> The all-record highest Danish tax level was 49.8% of GDP,<ref name=sktryk/> reached in 2014 because of high extraordinary one-time tax revenues caused by a reorganization of the Danish-funded pension system. The Danish tax-to-GDP-ratio of 42% was the seventh-highest among all OECD countries in 2022, after France, Norway, Austria, Finland, Italy and Belgium.<ref>[https://www.oecd.org/tax/revenue-statistics-2522770x.htm Revenue Statistics 2023. OECD.org, retrieved 18 December 2023.]</ref> The OECD average was 34%.<ref name=oecdrev>{{cite web| url = https://www.oecd.org/tax/revenue-statistics-denmark.pdf| title = OECD Revenue Statistics 2023 – Denmark |website=OECD |access-date=18 December 2023}}</ref> The tax structure of Denmark (the relative weight of different taxes) also differs from the OECD average, as the Danish tax system in 2015 was characterized by substantially higher revenues from taxes on personal income, whereas on the other hand, no revenues at all derive from social security contributions. A lower proportion of revenues in Denmark derive from taxes on corporate income and gains and property taxes than in OECD generally, whereas the proportion deriving from payroll taxes, VAT, and other taxes on goods and services correspond to the OECD average.<ref name=oecdrev/>

In 2016, the average [[marginal tax]] rate on labour income for all Danish tax-payers was 38.9%. The average marginal tax on personal capital income was 30.7%.<ref>{{cite web| url = https://www.skm.dk/english/facts-and-figures/marginal-tax-for-all-taxpayers| title = Marginal tax for all taxpayers |website=Danish Ministry of Taxation |date=8 April 2016 |access-date=24 November 2018}}</ref>

Professor of Economics at [[Princeton University]] [[Henrik Kleven]] has suggested that three distinct policies in Denmark and its Scandinavian neighbours imply that the high tax rates cause only relatively small distortions to the economy:  
* widespread use of third-party information reporting for tax collection purposes (ensuring a low level of [[tax evasion]])
* broad [[tax base]]s (ensuring a low level of [[tax avoidance]])
* a strong subsidization of goods that are complementary to working (ensuring a high level of labour force participation).<ref>{{cite journal|last1=Kleven |first1=Henrik Jacobsen |date=November 2014 |title=How Can Scandinavians Tax So Much? |journal=Journal of Economic Perspectives |volume=28 |issue=4 |pages=77–98 |doi=10.1257/jep.28.4.77|s2cid=54184316 |doi-access=free}}</ref>

in 2023, [[Denmark]] considered methods to increase taxes on energy dealers.<ref>{{cite web |date=4 May 2023 |title=Denmark mulls higher taxes for energy traders|url=https://www.montelnews.com/news/1497581/denmark-mulls-higher-taxes-for-energy-traders}}</ref>

===Government expenditure===

Parallel to the high tax level, government expenditure makes up a large part of GDP, and the government sector carries out many different tasks. By September 2018, 831,000 people worked in the general government sector, corresponding to 29.9% of all employees.<ref>{{cite web| url = http://statistikbanken.dk/lbesk02 |website=StatBank Denmark |title=LBESK02: EMPLOYEES (MONTH) BY SECTOR (2-GRP) |access-date=24 November 2018}}</ref> In 2017, total government expenditure amounted to 50.9% of GDP. Government consumption took up precisely 25% of GDP (e.g. education and health care expenditure), and government investment (infrastructure etc.) expenditure another 3.4% of GDP. Personal income transfers (for e.g. elderly or unemployed people) amounted to 16.8% of GDP.<ref name=convergence/>

Denmark has an unemployment insurance system called the A-kasse (''arbejdsløshedskasse''). This system requires a paying membership of a state-recognized unemployment fund. Most of these funds are managed by trade unions, and part of their expenses are financed through the tax system. Members of an A-kasse are not obliged to be members of a trade union.<ref name=CA-akasse>{{cite web|url=http://www.akasse.com/hvad-er-en-a-kasse|title=What is an A-kasse?|language=da|website=akasse.com|publisher=CA a-kasse|date=16 March 2011|access-date=16 May 2015}}</ref> Not every Danish citizen or employee qualifies for a membership of an unemployment fund, and membership benefits will be terminated after 2 years of unemployment.<ref>{{cite web|url=http://www.ma-kasse.dk/english/english-underside/|title=Introducing Masters Unemployment Insurance Fund |website=Magistrenes A-kasse (MA)|access-date=23 January 2015|archive-url=https://web.archive.org/web/20150123211233/http://www.ma-kasse.dk/english/english-underside/|archive-date=23 January 2015}}</ref> A person that is not a member of an A-kasse cannot receive [[Unemployment benefits in Denmark|unemployment benefits]].<ref>{{cite web|url=http://www.akasse.com/kontanthjaelp|title=A-kasse vs. kontanthjælp|language=da|website=a-kasse.com|publisher=CA a-kasse|date=21 March 2011|access-date= 16 May 2015}}</ref> Unemployment funds do not pay benefits to sick members, who will be transferred to a municipal social support system instead. Denmark has a countrywide, but municipally administered social support system against poverty, securing that qualified citizens have a minimum living income. All Danish citizens above 18 years of age can apply for some financial support if they cannot support themselves or their family. Approval is not automatic, and the extent of this system has generally been diminished since the 1980s. Sick people can receive some financial support throughout the extent of their illness. Their ability to work will be re-evaluated by the municipality after 5 months of illness.<ref>{{cite web|url=https://www.borger.dk/Sider/Oekonomisk-tilskud-fra-kommunen.aspx?segmentid=4db6b4e8-25dc-4447-9d91-7899f5d99eac#|title=Økonomisk tilskud fra kommunen [financial support from the municipality] |language=da|website=Borger.dk|publisher=The Danish State, Kommunernes Landsforening ([[Local Government Denmark]]) and Danske Regioner ([[Danish Regions]])|access-date=23 January 2015}}</ref><ref>{{cite web|url=http://bm.dk/Beskaeftigelsesomraadet/Ydelser/Sygedagpenge.aspx|title=Sygedagpenge [Social benefits for the sick]|language=da|publisher=Ministry of Employment|access-date=24 January 2015|archive-url=https://web.archive.org/web/20150128131857/http://bm.dk/Beskaeftigelsesomraadet/Ydelser/Sygedagpenge.aspx|archive-date=28 January 2015}}</ref>

The welfare system related to the labor market has experienced several reforms and financial cuts since the late 1990s due to political agendas for increasing the labor supply. Several reforms of the rights of the unemployed have followed up, partially inspired by the Danish Economic Council.<ref>{{cite web|url=http://ak-samvirke.dk/artikler/faa-overblikket-dagpengereformen|title=Få overblikket over dagpengereformen [Get an overview of the unemployment benefit reform]|language=da|publisher=AK-Samvirket|date=13 March 2013|access-date=24 January 2015|archive-url=https://web.archive.org/web/20150128112440/http://ak-samvirke.dk/artikler/faa-overblikket-dagpengereformen|archive-date=28 January 2015}} AK-Samvirket is an umbrella organization of the Danish unemployment funds.</ref> Halving the time unemployment benefits can be received from four to two years, and making it twice as hard to regain this right, was implemented in 2010 for example.

Disabled people can apply for permanent social pensions. The extent of the support depends on the ability to work, and people below 40 are not eligible unless deemed incapable of any kind of work.<ref>{{Cite web |url=http://bm.dk/da/Beskaeftigelsesomraadet/Ydelser/Foertidspension.aspx |title=Førtidspension |access-date=17 April 2018 |archive-url=https://web.archive.org/web/20180418032602/http://bm.dk/da/Beskaeftigelsesomraadet/Ydelser/Foertidspension.aspx |archive-date=18 April 2018}}</ref>