Iceland to tax housing to pay for lava barriers over volcanic eruption fears

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Iceland’s parliament has approved a new tax on all housing for the next three years to fund the construction of lava barriers to protect infrastructure in the southwest of the country, an area which is a hotbed of seismic activity and has been bracing for volcanic eruptions over the past days.

The law, passed overnight with 57 votes in Iceland’s 63-member parliament, levies a temporary property tax of 0.0008 percent on homes, and is expected to generate nearly 1 billion ISK (€6.5 million) in revenue.

The funds raised will be used to build protections such as dikes, embankments and canals around Svartsengi, a geothermal power station located on the southern Reykjanes peninsula, about 65 kilometers from the capital, Reykjavík. The power station is the main supplier of water and electricity to the peninsula.

The region has recorded thousands of earthquakes in recent days, with seismologists warning a volcanic eruption is imminent. Grindavík, a small fishing town with 3,000 residents close to the power station, was evacuated over the weekend, with images showing large fissures running through the streets and cracks in buildings.

Prime Minister Katrín Jakobsdóttir warned on Sunday that even with protective measures, preventing damage from a volcanic eruption might not be possible.

“Of course, this is complicated because we don’t know where a possible eruption can occur,” she said. “Such an action would be a preventive action, but it cannot be guaranteed that it will be successful.”

Despite the intensity of earthquakes decreasing, the Icelandic Meteorological Office said on Monday there was still a “significant likelihood” of a volcanic eruption involving the Fagradalsfjall volcano, around 40 kilometers from Reykjavík, in coming days.