– What is special is that you introduce it when things start to go well. If it had been introduced from the beginning, the state would have helped bear the costs in connection with development, trial and error, says tax expert Eivind Furuseth. On Wednesday, it was announced that Lerøy Seafood Group is laying off 339 employees from the new year. This affects facilities in several places in the country. The reason is said to be that the farming company does not get contracts for the further processing of salmon, which they justify with the ground rent tax the government is to introduce. Romsdal Processing has also announced that they will lay off 94 employees from the new year. – It is shocking that it has such a big impact so quickly. I don’t think the Ministry of Finance took that into account when the proposal was sent out for consultation, says Furuseth. Associate professor at the Department of Jurisprudence and Governance, Eivind Furuseth at BI. Photo: WILLIAM JOBLING / news The Finance Minister stands his ground Finance Minister Trygve Slagsvold Vedum (Sp) says layoffs are always serious. It creates great uncertainty and great cost for those concerned. He emphasizes, however, that it is the excess return from the cages themselves that the government wants to have ground rent taxation on. – When it comes to filtering and further processing, there shall be no basic interest tax on it. We have a model out now that will provide predictability and security to the incredibly important companies along our coast, he says. The proposal is out for consultation, and Vedum says they will make adjustments based on the input that comes in. But ground rent tax, that will be it. The so-called salmon tax will be introduced from 1 January 2023. – It is right that the industries with the largest profits should leave more money in their local municipalities, counties and to the national community, says Finance Minister Trygve Slagsvold Vedum. Photo: Marita Andersen / news If you think you can’t compare salmon and oil, Eivind Furuseth thinks that ground rent tax is basically good, because you only take away the super profit from exploiting natural resources. What he reacts to is the way it is done. He points out that the oil industry has had ground rent tax from the very beginning. When the large oil fields were developed and tried and failed, the state took 78 percent of the bill. In the hydropower industry, the ground rent tax was introduced a little later. But then they got a good transitional arrangement which meant that they were in reality reimbursed the tax values of all the investments that had already been made. – But when you have built, tried and failed in the farming industry, then the state has taken 22 per cent of the bill. When things start to go well, they want an extra 40 percent. Therefore, it is wrong, in principle, to compare farming with the oil and hydropower industry, says Furuseth. The tax community is also talking about the introduction. – There is talk of the state confiscating the money for the farming industry. Ground rent tax in the aquaculture industry This is the government’s proposal for ground rent tax in aquaculture: Effective rate of 40 per cent. Applies to the production of salmon, trout and rainbow trout. A floor deduction of 4,000-5,000 tonnes ensures that only the largest players will pay the ground rent tax. Effective date from 1 January 2023. Tax revenues are estimated at NOK 3.65-3.8 billion annually. The tax revenue is distributed equally between the state and the municipal sector. The proposal is out for consultation with a deadline of 3 January 2023. – Tax on an income we don’t actually have – The proposal on ground rent affects the entire value chain and not least local suppliers of goods and services, says general manager at Lerøy Aurora on Skjervøy, Kurt-Einar Karlsen. He believes this will happen because the ability to invest and develop will be significantly reduced. – It is completely incomprehensible that Vedum can refer to its own proposal as if it has not been processed. It is one of the activities in the value chain that is hit hardest. Karlsen now hopes the process will get on a constructive track and wants dialogue. – I hope we will have the opportunity to meet Vedum so that we can explain how and why industry and processing are being hit so hard by the proposal for land rent tax, he says. Kurt-Einar Karlsen in Lerøy Aurora The salmon tax will hit processing hard. Photo: Hans-Ludvig Andreassen / news Karlsen gives the following example of how he thinks the calculation might look for them: If we slaughtered 10,000 tonnes of fish from the cages, we would sell half at the spot price with an average price of NOK 80 per kilo. The other half goes to processing and is usually sold on a long-term contract at a fixed price. It will historically be lower than the spot price, for example NOK 60. This means that the price difference is NOK 20, which would total a difference of NOK 100 million in this example. – The way the proposal is based now, tax must be paid based on the guide price or standard price and not on the actual price achieved, which means that we must pay 40 percent tax on 100 million, which is the difference between the standard or spot price and the contract price, so it amounts to 40 million in tax on an income we don’t actually have, says Karlsen. – But with the surplus you have collectively, you still can’t afford to pay this? – In any case, we must discuss devices that do not hit in a way that causes parts of the value chain to be hit as hard as it turns out to be for processing and employment in the industrial part of the value chain, he says. Fears that jobs will be moved out of the country Karlsen believes the risk of entering into contracts will be so great that the government more or less puts processing in Norway to death. In the worst case scenario, he believes the jobs linked to processing in Norway will be moved out of the country. – We must postpone the introduction of ground rent tax until 1 January 2024. Then we will have time for a constructive and good process, ideally in dialogue with the trade union movement, the seafood industry and the host municipalities. Then we will find solutions that do not affect jobs and employment in the districts as the current proposal does, says Karlsen. – Using this actively in lobbying Professor Jon Olaf Olaussen at NTNU Business School understands Karlsen’s point, but thinks it is not as serious as he claims. – It can be problematic for a company in the short term, if you have to pay tax on an amount you have not received, he says. – But the margins for the big companies are so big that there shouldn’t be any problem. Olaussen, on the other hand, believes that this is only a new attempt by the industry to stop or reduce the rate of land rent tax. – I think it is quite obvious that they use this actively in a lobbying activity, but any industry would probably have done that because it is about their earnings, he says. Olaussen also does not think there are good reasons to stop investing in the industry. – The tax is proposed because there is a super profit in the industry, just like in the oil industry. You won’t find that in other industries, he says. – With the tax, the profit will be smaller, but it is still a super profit. Therefore, I think it makes no sense to say that you should not continue to invest there. Professor Jon Olaf Olaussen at the NTNU Business School believes that the farming industry engages in active lobbying. Photo: Kristin Grønning
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The Minister of Finance is adamant about ground rent tax despite layoffs in the farming industry – news Troms and Finnmark
