It has not only been rosy for Bø mayor Sture Pedersen after his tax stunt created international newspaper headlines in 2019. Bø was nicknamed “Norway’s Monaco” when they decided to cut the municipal wealth tax from 0.7 to 0.2 percent, in a attempts to get rich Norwegians to move to the municipality. And it worked. The stunt led to several rich investors reporting a move to the municipality in Vesterålen. Among the business profiles such as Bjørn Dæhlie, Einar A. Sissener and Kristian Adolfsen. But in November last year, the red-green government announced that it would no longer compensate the municipality for the losses resulting from reduced wealth tax. The tax cut inflicted on Bø around NOK 5 million in lost income from those who already live in the municipality. This loss had to be borne by the municipality itself. The same year, the former cross-country king sold his house in Bø, and moved to Switzerland, which is also known for its low tax level. The Bø mayor also took a stand against absent immigrants, whom he had not seen the slightest bit of. But the mayor takes comfort in the fact that the tax relief has led to the tax dollars rolling into the municipal coffers. At the municipal board meeting on Thursday, the first accounts were presented after the stunt was implemented from 1.1. 2021. – We are very pleased with the results so far. If we compare the tax revenue for 2020 and 2021, we have an increase of more than NOK 30 million, says the mayor. – We have given away some of these millions, but we have increased by 10 million in relation to the tax revenue. Much of the profit has thus gone to tax equalization. Nevertheless, they are left with more than the municipality had budgeted for. – It is a pilot project where it was predicted that we would go with 30-40 million in minus. The accounts do not show that. The details of the distribution and the total tax revenue for Bø municipality are somewhat unclear. – What we think has happened is that all those who have large fortunes also have ordinary income tax. So it is the tax as a whole that has increased, but we are not able to pick out whether it is the wealth or income tax that has given the profit. Will facilitate young people But despite all the adversity, Sture Pedersen does not intend to stop. – The municipality did this to attract people with strong finances. What we are doing now is making arrangements to attract young people. The wish is for young people to apply to the village. – We are optimistic and make arrangements for us to attract new labor, says Sture Pedersen. Photo: Lars-Bjorn Martinsen / news – Therefore, we have halved the kindergarten rates, provide subsidies for births, and have a goal of lowering the tax for all residents under 40. – When do you envisage introducing tax breaks for those under 40? – It is a larger project, but we are working on it in the party now. And we are concerned with personal measures to get people to move here. Must pay yourself The leader of the Business Committee in the Storting, Willfred Nordlund (Sp), says that there is nothing in the way purely practical to lower the income tax for those under 40 years. But it does have some drawbacks. – It is entirely possible for a municipality to reduce both the wealth tax and the income tax, which is the municipality’s share. The challenge is that the tax equalization between the municipalities does not take this into account. Tax equalization became a surprising problem the last time Bø chose to reduce the wealth tax. In fact, the then government had to come in and be a lifebuoy for Bø’s unique tax relief. Willfred Nordlund (Sp) is chairman of the business committee in the Storting, and a former member of the local government and administration committee. Photo: Bjørn Erik Rygg Lunde / news With the new government came new demands. – They can no longer be compensated through the tax equalization for the reduction of the wealth tax. That is, other municipalities should pay. A reduction in income tax will necessarily have to follow the same principle. Nordlund praises Bø for his creativity, but does not have much faith in tax relief for those under 40. – I would consider providing better services and more forms of financial carrot to families with children, to get more of them and more children, than to lower the income tax for those under 40, if you have such good advice. The municipality earns significantly more, both in the short and long term due to the revenue system for Norwegian municipalities. The tax equalization scheme Simply explained, the tax equalization scheme for the municipalities is based on a “Robin Hood” principle. Where a municipality with an income below the national average has been compensated for some of the difference from those who are above the average. In 2020, for example, Oslo was deducted NOK 5.7 billion, which was then distributed to poorer municipalities and county municipalities. From 2022, the government has agreed to change the scheme slightly to “counteract that the municipality’s reduced tax revenues as a result of lower tax rates will be compensated by other municipalities”.
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Bø and mayor Sture Pedersen with new plans to lower taxes – news Nordland
