S-city council member in Esbjerg: Reinstate the coverage fee

The overview of the highest corporate taxpayers in 2021 from Esbjerg Municipality showed that Ribe BioGas was the only energy company, despite the fact that Esbjerg is home to large companies within the energy industry.

This includes significant companies within the oil, gas and wind industries, which has resulted in Esbjerg actively marketing itself as "Denmark's Energy Metropolis". However, you have to travel approximately 30 km south to Ribe to find the municipality's only corporate taxpayer within the energy industry.

This is also something that Social Democratic city council member Jakob Lykke has noticed.

- I am surprised that all the large companies within the energy sector are not on the list. It is thought-provoking, and as a Social Democrat there is no doubt about what I think about it, says Jakob Lykke, who was the Social Democratic mayoral candidate in the 2021 municipal election.

Plans action

He also has an idea for how energy companies and other large companies can contribute more in the future.

- There are tools that can be used, such as the coverage tax, says the city council member, who has no doubt about why the tax would be good news:

- It would help make our core welfare even better. We are talking about schools, institutions and nursing home places. The tax is a per mille rate, which is a backlog, for example in schools.

The coverage tax is a special tax on commercial properties that the municipal council can choose to impose throughout the municipality. Jakob Lykke will work to introduce the tax in Esbjerg Municipality.

- Specifically, we have to bring it up in the budget negotiations after the summer holidays in 2024. It is something that we have to work on, says the city council member, who leaves no doubt that there is another solution:

- It would be preferable if everyone was like Ribe BioGas. But here locally, that is what we can do. The second is national politics in the Danish Parliament.

Expert: May be difficult to reintroduce

At the Danish School of Media and Journalism, local government researcher Roger Buch is well aware of the discussions about when the tax was removed by many municipalities, it was with the aim of promoting business, but that's just not how it has worked.

- The coverage tax has been abolished in almost all of Jutland - in my interpretation - based on the misconception that coverage tax scares companies away or suffocates them and that it is therefore good business policy not to have coverage tax, says Roger Buch, who sees that the consequence is different:

- In my best assessment, there are almost no companies that choose location based on coverage tax - it is an extremely marginal expense, and there are a whole lot of other factors that are decisive for the companies' decisions and location.

Now the municipalities are without the coverage tax with another problem.

- The 65 municipalities that have removed the coverage tax have simply waved goodbye to an income without getting a single company or job more - and the 65 municipalities are located in the low-growth areas of the country and are struggling with the economy. They have shot themselves in the foot. The 33 municipalities that still have the tax are located in the growth areas and thereby get a nice little extra income, explains Roger Buch.

Whether Esbjerg Municipality or other of the 65 municipalities can reintroduce the coverage tax is uncertain.

- That could be a problem in relation to the tax freeze. Once it has been abolished, you can then be allowed to reintroduce the coverage tax again, I am unsure about that, says Roger Buch and points out that it is also an area with a lot at stake.

Updated version.