Both Bjarni Benediktsson, the leader of the Independence Party, and Sigmundur Davíð Gunnlaugsson, leader of the Progressive Party are candidates for the title as each party won 19 seats in Saturday’s parliamentary elections.
While the Independence Party won the largest share of the popular vote by 2% over the Progressive Party, the big victory is considered to lie with the Progressives, who have more than doubled their representation in Parliament since the 2009 elections, when they won nine seats, which was an increase from the seven seats they won in the 2007 elections. Meanwhile, the Independence Party has only gained three seats since the 2009 election and despite the increase, this still remains the second worse results in the party’s history.
Although it is likely the two parties will form a majority coalition government, Sigmundur Davíð has stated
that he will only work with a party that will help him deliver on his promise to lower mortgage rates by 20%.
The promised mortgage reduction was the main carrot dangled by the Progressives in the election race as a proposed universal flat tax rebate. However, economist Jón Steinsson from Columbia University has shown that it is likely to benefit high-income earners and wealthy property owners at the expense of those living outside the Reykjavík area, who were not as affected by the real estate bubble. Jón told Vísir
that “75% of the flat tax rebate would run into the pockets of those who are not in any financial trouble."
The final decision of who will be the next prime minister of Iceland rests with President Ólafur Ragnar Grímsson, who will meet individually with the leaders of all elected parties this afternoon,