CEPOS analysis suggests Danish municipalities could lower taxes

A new analysis by the think tank CEPOS indicates that many Danish municipalities have accumulated significant liquid reserves since 2007, suggesting there is room for local tax reductions.

In Copenhagen, reserves have reached 31,685 DKK per inhabitant. CEPOS estimates that a liquidity buffer of approximately 3,500 DKK per inhabitant is sufficient for ongoing operations. If Copenhagen utilized its excess savings over a four-year period, municipal taxes could potentially be lowered by 2.88 percentage points, saving a typical working family with two children approximately 15,509 DKK annually.

In Bornholm Regional Municipality, the analysis suggests a potential tax cut of 0.4 percentage points over four years. Bornholm's liquidity has increased by 81 percent since 2023, rising from 3,590 to 6,506 DKK per inhabitant. While this could provide annual savings of 1,972 DKK for a typical family, the municipality still faces significant economic challenges, including a need to find 28.6 million DKK in additional savings by summer 2028.