This is shown in a recent report from Thema consulting which KS publishes today. Porsgrunn mayor Robin Kåss from the Labor Party has previously warned against the greatly increased tax on hydropower which has now been passed in the Storting. The new report makes him uneasy again. – Everyone understands that we must contribute in 2023, which will be an extremely difficult year. But we are concerned that this should not be a permanent transfer of funds from the municipalities to the state, he says. Around 220 Norwegian municipalities own hydropower. Many of the largest city municipalities are large owners. This is also the case in Telemark, where Porsgrunn and Skien are located. – Our assets in Skagerak Energi are the citizens’ savings. If this becomes a permanent arrangement, it means that these savings will simply be moved from the municipality and the citizens of Porsgrunn, to the treasury and the citizens as a whole throughout Norway, says Kåss. – We think this is unfair if you don’t change it when the situation normalizes, adds the Ap mayor. DISTURBED: Porsgrunn mayor Robin Kåss does not like that income from the power industry accrues to the state instead of the power municipalities. Photo: Anne-Sophie Drouet NOK 34 billion The increased tax that now comes on hydropower means a sharp transfer of future income from the municipalities to the state. This is stated by Helge Eide, area director for society, welfare and democracy, in the municipalities’ interest organization KS. – Thema consulting has calculated that the municipalities will lose NOK 34 billion – that is the present value of all future dividend payments, he says with reference to the report. BILLION LOSS: Area director Helge Eide in KS is worried about lost income in the power municipalities. Photo: Vibecke Wold Haagensen / news – If we convert it into an annual amount and start from a year where we did not have electricity prices as high as this year, we are talking about something over NOK 1 billion less in revenue for the municipalities and the municipal welfare services every single year. The reason for the lost income is that the Storting has decided to increase the ground rent taxation on hydropower, from 37 to 45 per cent. – Why is the value of the companies reduced? – When you have to pay more tax, you have to pay it based on the capital of the companies. When the capital goes down accordingly, the basis for paying out dividends also goes down, says Eide. – Since there is also some debt, which is included in the companies’ total value, the value of the equity falls even more. It is the equity that provides the basis for dividend payments to the municipalities in the future. Need money Ground rent is in practice a tax imposed on the power industry and other industries because they are allowed to exploit a natural resource. The purpose of the tax tightening that the Storting has adopted is to increase income to the state by tens of billions at a time of increased expenditure, also for the state. FUNDING NEED: The Center Party’s Geir Pollestad defends the increased tax on hydropower that the Storting has now adopted. Photo: Terje Pedersen / NTB Fiscal politician Geir Pollestad (Sp) says the tax increase is due to “a funding need in the budgets which means we have to take some action”. – NOK 34 billion in lost future income for the municipalities, is that a lot of money? – At the same time, the municipally and publicly owned power plants will make good money in the future. They also earn good money today, says Pollestad. – We are very keen that they should be publicly owned, and it should still be profitable for the municipalities to own power plants. It will also do so even if the taxes are adjusted up somewhat. In the report, different price scenarios are used as a basis. But in all the cases considered, the outcome is a reduction of around 30 per cent in what would otherwise have been the dividend payment. If electricity prices in the coming years are at a more normal level, the report estimates that the companies’ value will be reduced by NOK 70 billion. – If half of it goes to dividends, it is probably NOK 34 billion which is the present value of “minor dividends” to the municipalities in a normal price scenario for electricity, says Eide from KS.
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Increased power tax results in losses of billions for owner municipalities – news Norway – Overview of news from different parts of the country
