Proposing a range of tax cuts that would help all income groups, Denmark’s government has said that the proposed move would encourage people to work more as well as to prolong an economic upswing.

The center-right coalition of government led by Prime Minister Lars Lokke Rasmussen aims to cut taxes on wages, vehicles, household services as well as pensions by 23 billion Danish crowns (US$3.7bn) per annum gradually towards 2025.

Finance minister Kristian Jensen expressed hope that the proposal would help in addressing a number of challenges being faced by the country.

Announcing the proposal, Jensen said, “With this proposal we address a number of challenges. We increase the benefit of getting into a job, we make it more attractive to spend more time in the job, and we ensure that it makes better sense to save up to retirement.”

A very strong performance by the Danish economy recently highlighted the urgent need for reforms to avoid potential shortages in the labour market.

As per the OECD’s most recently-released stats, workers in Denmark pay the world’s highest tax revenue (46.6%) as percentage of gross domestic product (GDP).