While most people have had their expenses multiplied and are struggling to make ends meet, the state has raked in billions in VAT. Figures from the Swedish Tax Agency (see table further down in the article) show that the state has earned over NOK 21.5 billion in VAT on electricity so far this year. In the same period last year, the figure was 11 billion, i.e. just over half. – These are insane amounts, says Hilde Alvsåker, legal adviser at the Taxpayers’ Association. Hilde Alvsåker, legal adviser at the Swedish Taxpayers’ Association. Photo: HANS KRISTIAN THORBJØRNSEN Large parts of business have VAT deductions. It is therefore private households that primarily pay the state’s income from VAT on electricity, according to the VAT expert. This is what the figures say Value added tax is a tax we pay when we buy goods or services. Businesses and traders also have to pay value added tax on their purchases, but usually get a deduction for this tax. The figures include the central government’s income from value added tax (VAT) paid to businesses in business code 35.1. These are businesses that engage in “bulk electricity generation, transport from the production plant to the distribution network and distribution to end users.” Sources: Norwegian Tax Administration, Statistics Norway 21.5 billion in – 11 billion out The increase in VAT alone goes a long way in financing the state’s electricity subsidy. Until 19 July, the state had paid out NOK 11 billion in electricity subsidies, according to VG. Customers in southern Norway pay 25 percent in value added tax on the electricity they use. VAT is a percentage charge that increases in line with the electricity price. From September, the state pays 90 per cent of the amount that is over 70 øre per kilowatt hour. Customers in southern Norway are also compensated to a certain extent for paying VAT, with the state adding 25 per cent to the electricity subsidy amount. But the customers therefore pay VAT on the entire electricity bill, which at today’s prices makes the VAT very high. – Just the VAT for the part for which you do not get compensation can quickly amount to ten times more than it costs the power companies to produce the electricity, says professor of finance at the NMBU Business School, Espen Gaarder Haug. Espen Gaarder Haug, professor of finance at the Norwegian Business School NMBU. Photo: Privat Wants VAT exemption Both Haug and Alvsåker in the Taxpayers’ Association want VAT exemption on electricity – in addition to the electricity subsidy. – The point of VAT is to give the state income, but when electricity prices have become so high, this consideration falls away. The state receives income, says Alvsåker. She reminds that the state makes good money from the electricity crisis – even if we remove the VAT. In particular through state and municipally owned power producers. On 19 September, the Storting calls for an emergency meeting about the electricity crisis. NMBU professor Haug believes that a VAT exemption can be implemented immediately, in contrast to other measures such as cuts in exports. – Since we already have a VAT exemption for electricity in Northern Norway, it shouldn’t be difficult to implement for all residents, says Haug, who points out that countries such as Germany and Spain have recently cut VAT on electricity and gas. Haug and Alvsåker believe the VAT exemption should only be a temporary solution until “the situation is under control”. Large national differences It is in southern Norway that electricity prices are particularly high. It is therefore the residents here who contribute by far the most to the treasury through value added tax. Electricity customers in Nordland, Troms and Finnmark are exempt from VAT. And in central Norway, electricity prices have been so low that VAT revenues are also small. – In the north, they have a low price and do not pay VAT, while we in the south have a high price and have to pay VAT in addition. A VAT exemption will make it a bit more fair between north and south, says Alvsåker. Don’t think people will use more Espen Haug doesn’t think that a VAT exemption will lead to people using much more electricity, and that the electricity crisis will thus worsen. The reason is that large parts of electricity consumption are already tied up in long-term contracts in heavy industry. Furthermore, several households have already cut down on electricity consumption following the prices that were in place this winter, the professor points out. – Those who can afford it the least have already cut back. In the long term, people can take measures, such as solar cells and insulation, but this is not easy in the short term. Several solar cell providers today have full order books, says Haug. Spending 40 billion on support schemes State Secretary Erlend Grimstad (Sp) says that it has been important for the government to help people with their electricity bills at a time of extraordinarily high prices. He also says that they are spending around NOK 40 billion on various electricity subsidy schemes this year. – The vast majority of this goes to help ordinary people with their electricity bill. As far as businesses are concerned, the government has prioritized a reduced electricity tax. Businesses today get the value added tax back, so removing VAT will not help the companies, says Grimstad. And adds: – For private households, the current electricity subsidy scheme means that the state takes 90 per cent of the bill when the price exceeds 70 øre. This also includes VAT. Simply explained, this means that it is the state that takes most of the VAT bill when prices are high today. Grimstad calls the support scheme targeted and believes it is better than a general VAT reduction. The most important thing is to ensure that private households are not left with bills they do not get paid. – The government will also work in the future to see if we can take more measures that mitigate the problems for companies and people that result from the current crisis in the energy market.
ttn-69
The state has earned almost 11 billion more from electricity customers this year – news Rogaland – Local news, TV and radio
