COPENHAGEN, Denmark (AP) — Denmark's new government said Monday it wants to lower some income taxes, reduce CO2 emissions by 40 percent by 2020 and force motorists to pay a toll to enter Copenhagen while making public transportation cheaper.
Helle Thorning-Schmidt, the country's first female prime minister, heads an unlikely alliance that includes ex-communists and pro-market liberals and has struggled to chart an economic program.
After two weeks of tense negotiation behind closed doors, the three partners crafted a joint platform, meaning some of her elections promises for tax hikes on wealthy Danes and banks had to be scrapped after vehement opposition from the pro-business Social Liberals.
She warned that sacrifices would have to be made if the new government's platform were to succeed in boosting Denmark's sluggish economy.
"The government platform will show the way out of the crisis," Helle Thorning-Schmidt said as she presented a new three-party alliance including both ex-communists and pro-market liberals. "We cannot emerge from the crisis if everyone doesn't cooperate and we don't make unpleasant decisions."
Denmark's aging work force is putting a greater burden on the budget, which after years of surplus is projected to reach a deficit of 3.8 percent of gross domestic product in 2011 and 4.6 percent in 2012. This year's growth forecast has been reduced to 1.3 percent growth, down from 1.9 percent.
The partners agreed to inject 10 billion kroner ($1.8 billion) into the economy through public works projects, and raise value-added tax on cigarettes and junk food. That tax is different from a new "fat tax" that entered into force Saturday as a way to curb unhealthy eating habits.
"We are three parties who jointly want a new direction for Denmark," Thorning-Schmidt, 44, said as she presented the coalition's policy platform.
Like the previous center-right government, Thorning-Schmidt's government wants to hold a referendum on two of Denmark's exemptions to European Union cooperation — defense policy and law enforcement — but not the euro. Denmark won these opt-outs in the early 1990s.
She also said the previous government's decision to reinstate customs checks at Denmark's borders with Germany and Sweden — a controversial move that drew sharp protests from Germany and the European Union — would be abolished.
Thorning-Schmidt's alliance between Social Democrats, the Socialist People's Party and Social Liberals secured a narrow majority of 92 seats in the 179-member Folketing in last month's election.
Governing will be a struggle for Thorning-Schmidt, who will have to reach out to ex-Marxists — in power for the first time since they were established in 1959 — and pro-market liberals in her government.
The new government includes 14 men and nine women, of which Thorning-Schmidt's Social Democrats will have 13 spots and the two other parties — the Social Liberals and the Socialist People's Party — six each.
Margrethe Vestager, head of the Social Liberals, was tapped to become economy and interior minister, while the Socialist People's Party leader Villy Soevndahl was designated foreign minister.
Soevndahl's working-class party moved away from its Marxist roots following the collapse of the Iron Curtain two decades ago.
Indian-born Manu Sareen of the Social Liberals became Denmark's first government member with immigrant roots when he was picked as minister for equality and church affairs.
Thorning-Schmidt formally presented her government to monarch Queen Margrethe, who appointed her prime minister on Monday. Thorning-Schmidt will address the new Parliament on Tuesday as the assembly reconvenes after summer recess.