– I think most of us can see that with the high oil prices we have now, it has been completely unnecessary. But we did not know that then, says Solberg to NRK. In the spring of two years ago, the pandemic sent oil prices down to the 1920s. Then began a fierce tug-of-war in the Storting. Tough lobbying Mighty LO, NHO and the oil industry warned of the loss of tens of thousands of jobs without crisis measures. The solution was a controversial oil tax package with large temporary tax cuts (see fact box), which the Conservatives also voted for. What happened to the oil tax in 2020? In June 2020, KrF, Høyre, Venstre, Ap, Frp and Sp agreed to change the oil tax. The purpose was to ensure that the oil companies could recover the tax for investments on the Norwegian continental shelf more quickly, so that more money was freed up to start new projects. Oil companies pay corporation tax of 22 percent, just like other companies. Oil and gas are considered a common resource, and are usually very profitable to extract. Therefore, the companies in the industry must also pay ground rent tax of 56 percent. In total, the tax is 78 percent. On the other hand, the oil companies have several opportunities to receive a deduction before the ground rent tax is calculated: Deduction for investments: Before, the oil companies could write off investments over six years. The change in 2020 meant that the companies could carry the expense over two years in 2020 and 2021. Therefore, the tax bill became smaller in the short term. Free income: The oil companies have a special deduction of 20 percent, which was increased to 24 percent in 2020. It gave more to go on before the tax took effect. Negative forward tax: The companies could be paid the tax value of the expected loss through the income years 2020 and 2021. How long do the changes apply? The scheme applied in 2020 and 2021, and for all projects that submit a plan for development and operation (PDO) and a plan for construction and operation (PAD) no later than during 2022. All expenses in the project that run in the next few years are covered by the change until production is underway. In 2020, the parties disagreed on what the tax-free income should look like: FRP and SP wanted the tax-free income to be set at 20 per cent, but that there should not only be a deduction before calculating the ground rent tax, but also corporation tax. They did not get a breakthrough for that. Instead, the compromise was that the tax-free income should be 24 per cent, in exchange for the corporation tax being excluded. This spring, the price of oil has plummeted to 120 dollars, and the price of gas has never been higher. – We must take this into account that Norwegian politics made a mistake, in that they stimulated too hard at the time, because they were afraid to see a completely different picture. There was a lot of uncertainty at that time, she says. – The government put forward a much more sober proposal, but was pressured to give a more favorable arrangement by the Storting. What do you think about it? – I think there was a great deal of uncertainty. It was a tough lobbying activity against all politicians in the Storting from large companies in the oil industry, which later turned out to be wrong. But at that time, I think neither the oil companies nor the supplier industry had any thoughts that we should get to the level we are now, she says. Read also: In the middle of the green shift, the order book is soon full of oil projects Will still not change the package – But the high oil price has made this even more wrong than it looked? – Yes, because it would have been very profitable with the calculations that were. At that time, I think we should understand that then the oil price was below 30 dollars a barrel in a few days, and there was very low activity. We did not know what it was like. Then you can make a mistake, and I think the Storting made a mistake. In and of itself with the rest of us as well, but there was uncertainty and we must understand that then we were concerned with keeping jobs, says Solberg. The opposition in the Storting worked until 8 June 2020 to come to terms with the crisis package. From left: Labor Party leader Jonas Gahr Støre, Storting representative Trond Helleland (H), then FRP leader Siv Jensen and NHO leader Ole Erik Almlid NHO Photo: Vidar Ruud / NTB The package was so generous that even the Aker BP leader thought it was unnecessary animals. But Solberg does not want to change the package now, even though she sees it was too generous. – We must have predictability. The decisions we have made go out until Christmas. It only lasts until 2022. Therefore, we get a new system from 2023, she says. She aims for the Solberg government to propose comprehensive changes to the oil tax this autumn. On Tuesday, the Finance Committee in the Storting will submit a recommendation on how the tax system for the oil industry will be in the future. The Center Party: – A right package to give the Center Party a job in the Storting to ensure that the oil industry got a better scheme than the Solberg government offered. – We are responsible for what we did, and will follow up on the obligations we then gave, says leader of the business committee, Geir Pollestad, to NRK. Chairman of the Trade Committee in the Storting, Geir Pollestad (Sp). Photo: Hanne Høyland / NRK – But was the package too favorable? – In retrospect, you can always consider it, but based on the situation that was during the negotiations, it was the right package to give. How the development would be in the oil price later, no one knew. We were in a serious situation for the country’s economy, and then it was right to act, and we did, he says. Do not know the price In the opposition, SV and MDG were terrified when the package went through June 8, 2020 in the Storting. They received support from the environmental organizations. Professor Emeritus Diderik Lund in economics at UiO was also critical of the fact that politicians did not oppose the oil lobby. – More fields will be developed when the projects are so heavily subsidized. That was the purpose of the package, he says to NRK. Professor emeritus Diderik Lund in economics at UiO. Photo: Tobias Prosch Simonsen / NRK He reminds that the companies benefit from the tax changes for all projects that are submitted with a plan by New Year. The changes apply until the fields can produce oil or gas. The politicians do not know what the package has cost the taxpayers until the fields have been in operation. Lund thinks it could be tens of billions. – The effect is more difficult to calculate. How much it costs society, in turn, depends on how large a loss or profit the companies make, says Lund.
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