The Reasons Why Iceland Is So Expensive

iStock.com/Leopatrizi
iStock.com/Leopatrizi

More Americans are taking vacations to Iceland, and many are returning home with sticker shock. According to Iceland Magazine, “consumer prices in Iceland are on average 66 percent higher than in Europe,” with costs in the land of fire and ice outpacing famously expensive countries such as Switzerland, Norway, and Denmark.

Just look at the prices for food in Iceland’s capital of Reykjavík: A pre-made sandwich at a grocery store can cost more than $10, while a single teabag (with “free” hot water) can run you $4. A meal for two at a casual restaurant regularly costs in the ballpark of $80 to $100 while a beer at a pub downtown goes for about $12 during regular hours. In other words: Visiting Iceland is sort of like being trapped in an airport ... except this airport has volcanoes.

As for what makes the country so expensive, there’s no single explanation. It’s a combination of politics, economics, and geography.

Let’s start with geography. Since Iceland nearly tickles the Arctic Circle, its climate is not conducive to farming. There are few native crops and the growing season is short. According to a report from the European Consortium for Political Research [PDF], Icelanders produced “64.9 percent of their own food and beverages in 2010.” The rest of that food was imported. The same goes for most other goods.

The cost of importing those products—usually from the UK, Germany, the U.S., and Norway—gets passed on to the consumer. In Iceland, imported sweets and alcohol are slapped with an extra cargo fee and all wheat products are subject to a relatively high tariff. So prepare to shell out for that bread.

The country’s currency also keeps costs high. In 2008, Iceland was plagued by a financial crisis that saw the country’s three banks fail and the value of the national currency, the króna, plummet. But the country has seen a miraculous recovery. Since 2009, the króna has strengthened by a whopping 40 percent against the euro. In 2017, it was deemed the world's best-performing currency. That has caused the purchasing power of the U.S. dollar to decrease.

Taxes also add to the cost. Like most countries, Iceland has a valued-added tax, or VAT. (In the United States, a close equivalent would be the state sales tax.) The VAT for goods in Iceland is 24 percent, while the VAT for foodstuffs is taxed at a discounted rate of 11 percent. For Americans, these tax rates are very high. Most states don’t even charge a sales tax on food at all.

(However, while taxes are a contributor, they are not the cause of high costs in Iceland. Many countries have similarly high VAT rates and are not as expensive. Germany, for example, has a 19 percent VAT—and a 7 percent VAT on foodstuffs—but is home to significantly cheaper groceries than those sold in the United States. It’s also important to know that, as an international visitor, you can get some of your VAT refunded.)

Rather, the biggest contributor to costs in Iceland is the country’s high standard of living. In Iceland, the average pre-tax income is about $60,000, with a median income of about $47,000. (In the U.S., the average income is about $48,150 with a median of around $31,000.)

In Iceland, approximately 92 percent of the country’s working population is part of a labor union. Consequently, people who work jobs that Americans might consider “low-wage”—especially jobs in the service industry—earn much higher wages and enjoy more benefits. In fact, the national monthly minimum wage for most industries is 300,000 ISK, or about $2500 per month. That’s equivalent to $15 an hour. But since employees earn more, customers generally pay more for goods.

And, of course, any tourist complaining about high prices should take a moment to point a finger at the mirror. Since 2010, Iceland has seen tourism multiply fivefold. With a growing number of people competing for a limited supply of goods, prices have continued to rise; the dastardly supply and demand curve strikes again!

Here's How You Can Help Rebuild Paris's Notre-Dame Cathedral

 Kitwood, Getty Images
Kitwood, Getty Images

A fire at Paris’s famed Notre-Dame Cathedral raged for nine hours on Monday, drawing the world’s attention to the partial destruction of one of the best-known cultural monuments on the planet. The efforts of more than 400 firefighters managed to preserve much of the 859-year-old structure, but the roof and spire were destroyed.

Financial support for the building has already come pouring in, with billionaire François-Henri Pinault pledging $113 million toward reconstruction and another billionaire, Bernard Arnault, promising $226 million. A total of roughly $1 billion has come in from donations, but a revitalized Notre-Dame is a considerable expense that could cost even more.

For people who would like to assist, donations are being accepted by the nonprofit French Heritage Society for virtually any amount.

Why will expenses run so high? Prior to the fire, Notre-Dame was in dire need of extensive restoration. Buttresses caused instability to major walls, gargoyles were damaged, and cracks had formed in the now-destroyed spire. The cathedral is owned by the French government, which allots roughly 2 million euros (or about $2.26 million) annually to upkeep. Between the existing wear and the fire, it could take years or possibly decades for the work to be completed.

The publicity surrounding Notre-Dame has also motivated people to assist in rebuilding efforts on a smaller scale, and closer to home. Three churches in Louisiana that were recently targeted in allegedly racist arson attacks saw donations climb from $150,000 to over $1 million following the Notre-Dame fire. You can donate to that GoFundMe campaign here.

[h/t CNN]

The Isle of Sark Needs a New Dairy Farmer, But You'll Have to Bring Your Own Cows

Philipp Guelland/Getty Images
Philipp Guelland/Getty Images

If you've ever dreamed of moving to a secluded island to become a farmer, the Isle of Sark is giving you the opportunity. Sark, located in England's Channel Islands, is seeking a dairy farmer to supply milk to the island's population of 500. The only catch is that job candidates must be ready to move there with their own herd of 25 to 35 cows, Atlas Obscura reports.

Sark is a 3-mile long, mile-and-a-half wide island with green pastures, rocky cliffs, and no cars or street lamps. The only way to get there is by boat or one of the ferries that leaves from the nearby Jersey and Guernsey islands.

The last time the island had a dairy farmer was 2017. That year, farmer Christopher Nightingale shut down his business due to issues with costs and land instability. The Isle of Sark held onto feudalism long after the rest of Europe abandoned it, and though the practice technically ended in 2008, it hasn't died completely. Sometimes this works to the community's advantage, like when Nazis invaded in 1940, but it also means that farmers must lease their land for short periods rather than own it.

If you're willing to trade your right to own property for idyllic island living, Sark's dairy farmer gig maybe the perfect fit for you. The island is looking for someone, or a couple, with lots of dairy farming experience, and a herd of Jersey or Guernsey cows, which are native to the Channel Islands. You can reach out to Caragh Couldridge at info@caraghchocolates.com for information on how to apply.

[h/t Atlas Obscura]

SECTIONS

arrow
LIVE SMARTER