1997 21 February Collective agreement for state employees The state employees, as represented by the Joint Committee of the Central Organisations, agree on a settlement with the Danish Minister of Finance. The overall pay framework for the two-year agreement period constitutes 4.25 per cent. Of this figure, 2.9 per cent is set aside for general pay rises, which will occur on the following dates: 1 April 1997 (0.5 per cent), 1 April 1998 (0.9 per cent), and 1 October 1998 (1.5 per cent). The remaining 1.35 per cent have been earmarked for special purposes such as improvements to pension schemes, supplementary training, regulations on special benefits, and restructuring. The agreement also maintains the automatic adjustment scheme, which provides state employees with an annual pay rise (on 1 April) if their pay has failed to keep up with those found within the private labour market. Moreover, the agreement comprises a framework agreement on pilot projects with regard to new pay systems. The trial period commences on 1 January 1998 and is expected to end on 31 March 2001. The idea is that cross-functional personnel groups within ministries and agencies or all personnel within individual agencies can sign up to participate in these pilot schemes. The participating parties can then enter into agreements on pay systems which are founded on a fixed base pay plus additional pay which may be allocated as function-related pay, performance-related pay, etc. It has also been agreed to complete the pension schemes which were initiated in 1989 to full term. On 1 October 1997, total pension contributions for state employees which fall within the scope of these schemes will amount to 12 per cent of their pay. 27 February Local-authority collective agreement Local government employees, as represented by KTO (The Association of Local Government Employees' Organisations), agree on a settlement with local-authority employers. The overall pay framework for the two-year agreement period constitutes 4.25 per cent. Of these funds, 2.95 per cent are set aside for general pay rises, which will take place on 1 April 1997 (0.5 per cent), 1 April 1998 (0.95 per cent), and 1 October 1998 (1.5 per cent). The remaining 1.3 per cent have been earmarked for a number of special purposes: decentralised pay, new types of pay, extra pay rises for management and middle management, extension to the pension schemes for trade unions under the auspices of the Danish Federation of Trade Unions, and for special negotiations carried out by individual trade unions. The so-called adjustment scheme is maintained, occasioning a general pay rise of 1.1 per cent on 1 April 1997. The framework for a new pay system has also been established. As of 1 April 1998, it becomes possible for organisations, trade unions, or personnel groups to transfer to a pay system which comprises basic pay with opportunities for pay improvements by means of function-related pay, performance-related pay, etc. 8 April Amendments to taxes/duties As of 1 May 1997, the Danish Parliament increases taxes on beer and wine by almost four per cent. This amendment entails a DKK 1.15 price increase on a crate of 30 bottles of standard lager, whereas the tax increase on wine will come to nearly DKK 0.25 for a bottle of table wine and nearly DKK 35 for a bottle of fortified wine. (No. 275/15 April). 30 April Denmark "2005" The SR government presents a plan for the development of Danish society until the year 2005. Government objectives include the creation of 240,000 new jobs during the next eight years, thus occasioning a 5 per cent reduction in unemployment. The total number of transfer-benefit claimants is to be reduced: from 920,000 claimants this year to 750,000 claimants in the year 2005. Foreign debt must be repaid before 2005, and public debt must be reduced from 67 per cent of GDP to approximately 40 per cent. As regards the environment, CO2 emissions must be reduced by 20 per cent in relation to 1988 levels. The government intends to increase the gross tax by one per cent per year during the years to come, and to increase green taxes. These tax increases are to finance a reduction in personal-income tax, particularly for low-income groups. 5 May Tax package The government enters into an agreement with the Socialist Peoples¿ Party and the Danish Red-Green Alliance on a tax package which means that transportation by means of domestic flights and cars becomes more expensive, whereas travel on trains and buses becomes cheaper. The agreement comprises a ten per cent reduction in fare rates which extends to local traffic in Copenhagen (trains and buses), interregional trains, private railways, and regional traffic companies within counties and local authorities. The tax package includes the following key elements: the introduction of a so-called green vehicle-ownership tax, which is based on the normal fuel (petrol or diesel) consumption of the car in question. This Act means that new cars will be divided into approximately 25 categories in accordance with their mileage performance per litre of fuel. The difference in tax rates from one category to the next will be between DKK 400 to DKK 800 per year. This Act applies to cars which were first registered on 1 July 1997 or later. (No. 360/2 June). Vehicle-registration taxes and car excise duties are amended as a result of the green taxation scheme. Car excise duties are abolished for new passenger cars; these vehicles will fall within the scope of the new green vehicle-ownership tax instead. A reduction in the tax allowances hitherto in force for airbags is introduced. The scale brackets used when calculating vehicle-registration taxes are increased; this means that the tax on new cars comes to 105 per cent of DKK 48,800 and 180 per cent of the value in excess of this figure. (No. 361/2 June) Taxes on vans are restructured, causing the unit tax on vans to be replaced by a value tax. The present vehicle-registration tax of DKK 30,000/19,000 no longer applies to vans. Instead, a 30 per cent tax is introduced on the value which exceeds DKK 30,000 (including VAT, excluding tax). Also, the tax allowances with respect to the vehicle-registration tax for ABS-brakes and other security equipment has been restructured, so that deductions are now made to the taxable value of the vehicle in question. This allowance comes to DKK 4,165 for ABS brakes and DKK 1,280 per airbag (up to a maximum of four airbags). The regulations on profits on vehicles are also amended: a minimum value is introduced with respect to the taxable value of retailers' purchase prices plus 5 per cent, and profit rates for importers cannot be negative. Finally, the car excise duty is amended to introduce an additional charge of DKK 5,000 on large vans which are used for private transportation; the corresponding rate for small vans is DKK 1,000. The additional charge for vans which are used for both private and business purposes has been set at 50 per cent. (No. 363/2 June). As of 1 January 1998, Danish tax regulations on air travel will be in line with EU legislation. Currently, a DKK 65 tax is levied on all passengers departing from Denmark to foreign destinations, whereas no tax on domestic airline passenger departures exists. In future, domestic airline passengers will also fall within the scope of taxation. As part of the current rigorous economic policy, the tax rate per departing passenger is increased from DKK 65 to DKK 75. This means that the legislation stipulates that a tax of DKK 75 be paid to the Danish state per departing passenger, thus occasioning a DKK 150 tax for domestic round-trip tickets and a DKK 75 tax on round-trip tickets for foreign destinations. (No. 449/10 June). Finally, the agreement comprises an increase in the land registration fee from DKK 700 to DKK 1,200. (No. 369/3 June). 15 May New Social Security Act The government enters into a broad agreement on new legislation on social security. This agreement means that as of 1 July 1998, the 1976 Bistandslov ["Social Security Act"] is replaced by four new social Acts. The main points in these four Acts are outlined below: 1) Act on active social policies: * The age limit with regard to activation is changed to 30 rather than 25 years. Young people under the age of 30 must commence activation after 13 weeks on cash benefits at the latest. In the event that a person is absent from activation, local authorities can reduce or refuse financial aid. Local authorities come under an obligation to activate all cash-benefit claimants with problems other than unemployment. * Local authorities cannot provide aid where applicants or their spouses have capital which can cover the need. Amounts of up to DKK 10,000 per person are ignored. * Persons who find themselves on social security cannot be forced to withdraw their capital pensions until a six-month period has elapsed. Capital pensions of less than DKK 50,000 are completely exempt from this scheme. * After six months on cash benefit, it will no longer be possible to receive benefits greater than the maximum unemployment-benefit rate. This is to induce the highly paid to become members of an unemployment insurance fund.. * The scheme for a 50 per cent pay subsidy for "light jobs" for those with special needs is continued. 2) Act on social services: * In general, users must have greater influence on social services, and it should be very simple for users to establish an overview of their rights and obligations. * Users must have greater co-determination with regard to the services rendered, e.g. assistance with personal care. Formal complaints with regard to aid will be facilitated. * Day-care institutions are reminded of their obligation to adhere to the official waiting lists and refrain from relegating particular groups, such as children of unemployed parents, to the bottom of such lists. * Parents who are entitled to day care for their children may elect to receive a reimbursement of up to 70 per cent of the labour cost of e.g. a nanny instead. However, such subsidies cannot exceed 85 per cent of the cost of the cheapest child-care opportunities within the relevant local authority. 3) Act on social administration: * Local authorities and counties must stipulate the shortest time limits possible with regard to administration and case processing. The public must have the opportunity to take an active part in case processing. * Local authorities and counties must carry out more rigorous monitoring and supervision of institutions working with e.g. child care, drug addicts, or the disabled. 4) The Pensions Act: * Local authorities assume all authority as regards allocation of early-retirement pensions. All opportunities for rehabilitation must be exhausted before early retirement is awarded. 30 May Tax and duty amendments The Danish Parliament adopt a number of amendments to taxes and duties: The charges levied on natural gas and town gas are increased from DKK 0.01 to DKK 1.64 per cubic metre. However, from the time of entry into force in 1997 until 31 December 2008, this tax will be DKK 1.23 per cubic metre, which corresponds to 75 per cent of the final tax rate. During a transitional period, the five regional natural-gas companies will receive individually determined allowances with regard to this charge. (No. 443/10 June). The petrol tax is differentiated in accordance with benzene content. During a transitional period, from 1 January 1998 to 31 December 1999, petrol taxes are reduced by DKK 0.04 per litre for petrol with benzene content of less than 1 per cent per litre. For petrol with benzene content between 1 and 2 per cent, the petrol tax is reduced by DKK 0.02 per litre. No change is made to the petrol tax for petrol with benzene content between 2 and 3 per cent. The tax is increased by DKK 0.02 per litre for petrol with benzene content between 3 and 4 per cent, and by DKK 0.04 per litre for petrol with benzene content between 4 and 5 per cent. (No. 450/10 June). 18 June EU summit in Amsterdam The Heads of State and Government of the EU enter into an agreement on a new EU Treaty. A special Protocol based on the 1992 Edinburgh Agreement (where the four Danish opt-outs were established) means that Denmark will be outside future cooperation on defence policies, asylum policies, and visa policies, to the extent that such cooperation is supranational. Denmark has acceded to the Schengen Agreement, which will constitute a part of the new EU Treaty. According to the Protocol, Denmark has a time limit of six months to announce whether it will follow the decisions made by the other countries or pursue its own course. In the event that Denmark does not comply with the regulations of other countries, it is up to these countries to decide whether or not this will have any impact on the open borders between Denmark and e.g. Germany or Sweden. A referendum on the new EU Treaty is projected for spring 1998. Among other things, the Amsterdam Agreement addresses the following issues: - A common strategy to combat unemployment must be prepared. The EU can contribute to pilot projects on job creation. - The social chapter becomes part of the Treaty. As yet, the social chapter addresses the issue of joint maternity/paternity leave and the issue of employee's right to co-determination and consultation, e.g. when large enterprises face major restructuring processes. - The environmental guarantee, which entitles any Member State to maintain stricter environmental regulations than those of other Member States, is expanded in scope to include public health. - Immigration, visa regulations, and asylum issues become common EU policies. In five years from now, the issue of which decisions can be made by means of a qualified majority vote will be determined. - The EU and the WEU Union will collaborate closely. However, a merger of the two entities is postponed indefinitely. - The President of the European Commission must be appointed by the Heads of State and Government of the EU, but must be approved by the European Parliament. The number of EU Commissioners will remain 20; this means that the major Member States will surrender their second Commissioner when the EU accepts new Member States. To compensate for this, however, voting procedures will be amended to provide the major Member States with greater influence. 26 August Finance Act Proposal (Budget) The Minister of Finance introduces Bill No. L 1 of 26 August 1998: the 1998 Finance Act. 7 October The government's policy statement The Danish Parliament is back in session and is opened by the Prime Minister's opening speech. With a view to reducing economic activity and prolonging the period of economic recovery, the government wishes to implement a series of initiatives to promote private and public saving. The most important policy statements in this speech are listed below: - A special 1 per cent pension contribution to the Danish Labour Market Pension Fund (ATP) will be levied on employees, self-employed individuals, and unemployment-benefit and cash-benefit claimants. - In an effort to reduce private consumption which has been financed by means of mortgages on equity which has been created by the significant increases to property prices, stamp duties on additional mortgages are increased from 1.5 per cent to 5 per cent. This increase is temporary and expires at the end of 1998. - A number of cuts and economies are to be carried out in an effort to reduce public expenditure by DKK 2 billion in 1998. - Labour-market flexibility and mobility must be increased by requiring that unemployed individuals accept reasonable employment after a six-month period of unemployment. The concept of "reasonable employment" is clarified. At the same time, unemployed individuals are required to apply for jobs outside of their immediate sphere of competence after a period of six months of unemployment. Steps are taken to clarify that retraining which can increase the possibility of employment is always compulsory. With a view to avoiding situations where large differences exist in unemployment rates between neighbouring regions, cross-regional public employment services are promoted and the requirements with regard to geographic mobility are made more rigorous. - The current right to take parental leave with pay in the form of unemployment benefit during the first 14 weeks after the child is born is extended from two to four weeks. - Environmental taxes directed against the agricultural sector must be increased. A bill will be presented on the introduction of a nitrogen tax. Also, a "significant increase" in the tax on pesticides and herbicides is also proposed. Options are also being considered with regard to reimbursing taxes on CO2 and SO2 to the agricultural sector. This has hitherto been done by means of reductions to charges with regard to plant and veterinary services, but may well - if the agricultural sector so desires - be carried out on the basis of turnover plus VAT. - The so-called "millionaire break" with regard to the rental-value tax on properties is increased, so that the high rental-value tax rate (six per cent) will only be levied on the part of the publicly assessed property value which exceeds DKK 2.1 million. - Private employers must pay sickness benefits for a period of three weeks rather than the current two weeks. At the same time, employers will have the opportunity to choose whether they wish to pay the cost of sickness benefits for the first two days of absence due to sickness themselves, or if they wish to pay higher premium rates to the insurance schemes instead. - Buying and selling your own home should be easier and cheaper. This is to be effected by means of a number of amendments to the legislation governing property trade, amendments which are to be based on the catalogue of ideas which were presented by a working group in February. Paperwork should be simplified, costs should be brought down, and market transparency should be increased by introducing a rule which stipulates that all properties which are put up for sale must be presented on the Internet. - New legislation is to be introduced with regard to rental housing. Within the private housing market, landlords must be urged to maintain their properties. Tenants must be consulted on issues regarding maintenance and improvements. With respect to non-profit rental housing, tenants must have access to submit formal complaints. - It must be easier to repay student loans and - in special cases - to have them cancelled. A bill provides opportunities for reducing interest rates on state-guaranteed student loans. Such reductions are to be effected by means of refinancing of the relevant debt in the Mortgage Bank. - It should be possible to sign electronic documents by means of a so-called digital signature. The objective is for this digital signature to be as valid in legal terms as signatures by hand. 7 October Announcement of referendum on the Amsterdam Treaty In connection with the opening of the Danish Parliament, the Prime Minister announces that the coming referendum on the Amsterdam Treaty will take place on Thursday, 28 May 1998. 10 October Agreement on limitations on private consumption As part of the efforts to limit private consumption by means of savings, the government enters into an agreement with Venstre (Denmark¿s Liberal Party) and the Conservative Party. This agreement will be in force in 1998 and includes the following elements: Temporary pension savings will be collected from employees, self-employed individuals, and unemployment-benefit and cash-benefit claimants. The amount to be collected constitutes one per cent of the labour-market contribution base. An amount of up to DKK 34,500 will be exempt from this temporary pension contribution. An annual amount of DKK 1,300 is deposited for unemployment-benefit and cash-benefit claimants. The Act entails a transfer of the contributions made from the tax authorities, unemployment-insurance funds, and local authorities to the Danish Labour Market Pension Fund. In November 1999, the Danish Labour Market Pension Fund will distribute these contributions into separate, individual accounts. Interest will be accrued on these accounts, and the resultant funds will be administered separately from the Danish Labour Market Pension Fund¿s common capital. At retirement age, 67 years, the funds in these individual accounts will be paid out to the relevant account holders. In the event of death before retirement age, the account funds are paid out to the estate. (No. 803/24 October). It will be possible to establish home-savings accounts with up to ten years of tax exemption on the accumulated interest. The scheme stipulates that the maximum deposit per person for such accounts is DKK 12,000 for 1998, while the minimum deposit is DKK 1,200. The objective of this home-savings account must be to purchase a home or land on which such a home is to be built; the account funds may also be used to pay deposits or advance rent for rented housing, or to purchase shares in companies, societies, etc., which offer right of use on a permanent residence. No deposits may be made to this account after 1998. The amount saved may not be withdrawn until a three-year period has elapsed after the original deposit was made, and the funds must be withdrawn no later than ten years after this date in order to maintain tax exemption on the accumulated interest. Withdrawal of these funds requires that documentation be submitted to the relevant bank, proving that they will be used for one of the purposes outlined in the above. (No. 808/29 October). 23 October. Stamp duties increase The Danish Parliament adopts the projected temporary increase in the stamp duty on mortgage deeds on permanent residences and holiday homes. The Act enters into force on 25 October 1997 and is effective as of 23 October 1997 and until 31 December 1998. The Act entails an increase from 1.5 per cent to 5 per cent. (No. 804/24 October). 27 October The Danish government sells Tele Danmark shares The Danish government sells its shares in Tele Denmark to the American telecommunications group Ameritech. The agreement between Tele Danmark and Ameritech is expected to entail a complete privatisation of Tele Danmark, and to assign full control of Tele Danmark to the American partner. Ameritech buys 34.4 of the share capital in Tele Denmark from the Danish government for approximately DKK 21.1 billion, and when Tele Danmark buys DKK 10 billion worth of shares back from the Danish state, Ameritech becomes the largest shareholder by far with a holding of 42 per cent of all shares. 27 October Global unrest at stock exchanges The substantial falls in prices seen at Asian stock exchanges during recent days hits Europe in the morning and then moves on to hit the USA, where the New York stock exchange takes the unprecedented step of suspending all dealing for the remainder of the day after substantial declines to the prices of benchmark shares as a result of the financial crisis in Asia. 21 November ØK moves to Singapore As a result of the financial hardships of ØK, the management announces that the company headquarters will be moved from Copenhagen to Singapore at the beginning of 1998 in order be closer to the main activities in Asia. 21 November EU summit on unemployment The Heads of State and Government within the EU meet at an EU Summit to discuss ways in which to combat European unemployment. In spite of disagreement with regard to specific objectives and initiatives to combat unemployment, a Job Action Plan is prepared. This action plan includes the following declarations of intent: - Young people must be offered jobs or education within a six-month period, and the long-term unemployed must receive similar offers within a twelve-month period. - 20 per cent of all unemployed individuals must be offered vocational training. - All EU Member States must prepare action plans addressing the unemployment issue. These action plans are to be presented at the EU Summit in Cardiff in June 1998. The Member States have a five-year period to meet these objectives. 1 December Agreement on the Finance Act The government concludes the negotiations on the 1998 Finance Act. The government parties, Venstre (Denmark¿s Liberal Party), the Conservative Party, the Socialist Peoples¿ Party, the Centre Democrats, and the independent MP Jacob Haugaard vote in favour of the overall 1998 Finance Act. The final settlement on the Finance Act comprises a number of sub-agreements which have been entered into with various parties. Among other things, these sub-agreements include the following elements: * New taxes are introduced on chocolate, ice cream, coffee, tea, and mineral water. This entails the following increases in cost: The price of chocolate increases by DKK 1.75 per kilogram; ice cream is up by DKK 0.40 per litre, coffee is up by DKK 1.65 per kilogram, tea by DKK 1.55 per kilogram, and mineral water rises by DKK 0.25 per litre. Moreover, packaging taxes are introduced on all bottles. This does not, however, apply to bottled dairy products and pharmaceutical products. * Stricter regulations will be introduced with respect to labour-market availability. Among other things, this entails that unemployed individuals must apply for work outside their own sector after only six months of unemployment. Moreover, the unemployed must - in special cases - be prepared to commute for up to four hours a day. Cash-benefit claimants must be registered with the Public Employment Service and be subjected to more thorough assessment as regards labour-market availability. * User charges are to be abolished within labour-market training, and DKK 75 million are set aside for training (activation) of unemployed individuals with higher education. * An additional 1,000 students are to be admitted to higher education. An additional DKK 15 million must be set aside for the Folk High Schools due to a reduction to student applicants. Moreover, a new type of education is established: "alcohology". The objective is to provide a training scheme within the scope of the so-called Minnesota model for treatment of alcohol abuse, where former alcoholics treat those who are still afflicted by the addiction. * As of 1 April, the paternity-leave period is doubled: from two to four weeks. The additional two weeks are to be taken after the expiry of the mother's maternity leave, and the total parental leave period is extended from 24 weeks to 26 weeks. * Pesticide taxes are doubled in an effort to reduce the use of pesticides, thus securing drinking-water reserves. Moreover, nutrient discharges from the agricultural sector are to be reduced by means of lower norms for fertiliser usage and levies on usage which exceeds this tax. * An additional DKK 5 million is set aside for sale and marketing of environmentally friendly (organic) products. Levies on control of organic farming are also removed. * DKK 250 million are set aside for improvements of home help. Senior citizens are to have greater freedom of choice in determining how the allocated assistance is to be utilised. New regulations are to ensure that home help is in actual fact provided, and that compensation is made for any cancellations. * DKK 200 million are set aside over a three-year period for improvements to the Copenhagen-Ringsted railway tracks. Moreover, better and longer trains are to operate in Jutland, and the S-train network in the Copenhagen area must be improved and extended. * Funds will be set aside in 1998 to an amount of DKK 250 million for new premises for the Danish National Archives. These new premises are to be situated in Ørestaden. * An additional DKK 100 million are set aside in 1998 for measures directed against special crime issues in the larger cities, and an additional DKK 80 million is allocated to the courts in an effort to reduce waiting times within the judicial system. * The depreciation period for goodwill is reduced from 10 to 7 years in order to ease the problems which arise in connection with generational handovers of enterprises.