Taxation Taxation is necessary to provide many of the ser- vices needed in a modern society. Most people want a maximum of services and a minimum of taxes. This is a very difficult combination to reach. Criticism of the Icelandic tax system points to the unjust division of the tax burden, which is caused partly by tax fraud and partly by the condi- tions for legal tax deductions. People are under- standably vexed at having to pay higher taxes than their neighbours who have higher incomes. This injustice must be corrected using two methods. Firstly, by increasing investigations and tax inspections to minimize tax fraud. Secondly, by revising assessment regulations so that a more just distribution of the tax bur- den may be achieved. Such regulations need to be in accordance with the real con- ditions in our society. There have been considerable changes made in the tax laws during the past few years, usually to the benefit of private enterprise and wealthy individuals rather than the common wage eamer. The aim has been to standardize taxation con- tribution percentages — however, this change results in a tax decrease for people with higher incomes. Indirect taxation is the government's largest source of revenue. Of these, the sales tax is the largest, sometimes reaching 40% of govemment revenues. Criti- cism of the sales tax system has resulted in an increase of exemptions and ev- asions. Many would like the system to be replaced by a value added tax system which can be reimbursed at all marketing stages until it reaches the consumer. This change would be to the disadvantage of people with lower incomes. Total revision of the tax system has waited too long, it can no longer be delayed. 38

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