When Finance Minister Trygve Slagsvold Vedum (Sp) took to the floor of the Storting on 6 October and presented the national budget, he said: “The greatest value in Norway is people. It is also people who create the greatest economic value” Now he is told that the taxes he and the government impose on people are an unreasonably large foothold for this value creation. – If you get extra income, it is natural to spend some on the public sector and some on reducing harmful taxes, says committee leader and NTNU professor Ragnar Torvik. NTNU professor Ragnar Torvik was behind the tax committee in 2022, and has now studied the government’s financial policy. Photo: Alf Simensen / N High taxes The committee believes that the community needs tax revenue, but states that taxes in Norway are high. – In Norway, we have prioritized reducing harmful taxes in favor of increased public spending. On Tuesday, Torvik delivers a critical report to the Støre government on how the money in Norway is spent. Advisory Committee for Fiscal Policy Analysis is the resilient name for the committee that will see how the government’s budgets affect the economy in the long term. Increased spending = more tax The committee has calculated that public expenditure now accounts for over 60 per cent of the Norwegian mainland economy, measured by gross national product (GDP). That is far more than in our neighboring countries. In Sweden and Denmark, public expenditure accounts for 50 per cent. Much of the spending in Norway comes from taxes, and therefore has a cost to the economy, according to the report. Norway stands out with higher public consumption than Denmark and Sweden. Graphic: Ministry of Finance Although Norway has higher spending, the country does not have more public employees in either schools or health and care than neighboring countries. The committee has looked at where the extra money ends up each year. It goes to people in the form of social security benefits, in addition to subsidy and support schemes for people and businesses. – We also buy a lot of goods from private individuals and invest more in road and rail projects, he says. Advisory Committee for Fiscal Policy Analyzes The Advisory Committee for Fiscal Policy Analyzes shall provide professional advice related to the Ministry of Finance’s work with macroeconomic issues and on long-term challenges for a sustainable fiscal policy. The committee is chaired by professor of social economics at the Norwegian University of Science and Technology (NTNU) Ragnar Torvik. Harmful tax The committee is concerned with taxes and duties because they have harmful side effects in the economy. – What is a harmful tax? – A tax on work will always have a harmful effect because it pays for society that people work, while a tax will make them work less because less of the gain from working accrues to you, says Torvik. The Støre government has given tax relief to people with incomes below 800,000, and given an increased tax bill to business. Among other things, they get praise for the ground rent tax for aquaculture. Photo: Emilie Holtet / NTB He is most critical of the additional employer’s tax, which was originally on incomes over NOK 750,000. It pays the companies that hire. – We believe it clearly has harmful effects on the economy in the long term, says Torvik. The government’s reason for introducing an additional tax was to avoid spending more oil money. – It is a prime example of not taking measures that are harmful in the long term in order to achieve a short-term budget goal, says Torvik. – Are there taxes that you believe are not harmful? – Land rent tax aquaculture is much less harmful than tax on work. We believe such a tax is good, especially if you use the money to reduce other taxes such as employment tax and wealth tax, says Torvik. Thinks the government played a trick with billions Torvik and his committee also think the government has tried to make up the national budget. In order to get SV to support this year’s state budget, the government had to add several billion to, among other things, increased child benefit, free after-school care, increased student support and more climate measures. The problem was that this would greatly increase the use of oil money and could appear irresponsible. The government resolved this by using 9 billion that had been set aside to cover any losses in Export Financing Norway. – That move goes against the intention of the action rule, says Torvik. – Is it a trick to get around the budget principles? – Yes, it is close to trickery to get around the budget principles, says the committee leader who also chaired the tax committee. Just over a year ago, they submitted their recommendations to the government.
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– Lowered the priority of reducing harmful taxes – news Norway – Overview of news from different parts of the country
