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TAX

Norway tax rate falls below France and Italy

Norway's tax-to-GDP ratio dropped to 42.2 percent in 2012, meaning that, despite its reputation as a high tax Scandinavian country, it now has a lower overall tax rate than both France and Italy.

Published: 16 June 2014 14:15 CEST
Norway was one of only eight out of the 30 countries surveyed by the European Union's Eurostat agency to register a fall in its tax-to-GDP ratio in figures released on Monday, with its tax burden dropping from 42.7 percent to 42.2 percent between 2011 and 2012, a bigger drop than any country except Portugal. 
 
The highest rate of the 30 countries, which added Iceland and Norway to the 28 EU states, was reached in Norway's southern neighbour Denmark, which had a tax to GDP ratio of 48.1 percent, followed by Belgium at 45.4 percent, France on 45.0 percent, and Italy on 44 percent. 
 
Sweden, while only fourth place in terms of the total tax burden, levied the highest tax on labour in the European Union, with the state taking 58.6 percent of wages. 
 
Norway nonetheless came eighth, closely behind Italy and Austria. 
 
Across the EU, the overall sum of taxes as a percentage of GDP reached 39.4 percent in 2012, although was 40.4 percent in the 18 countries using the euro currency.
 
The euro countries also have an average tax on labour of 38.5 percent, well ahead of Norway's total tax on labour of 36.4 percent. 
 
Norway has seen its tax burden drop by almost a percentage point in the decade since 2002, when the ratio hovered above 43.1 percent.  The tax burden is likely to drop more dramatically in 2013 and 2013, when the tax cuts brought in by the present right-wing coalition start to be felt. 
 

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OIL

Why Norway’s earnings dropped in 2020 despite steady taxes from individuals

Did Covid-19 take a chunk out of your income last year? You’re not alone. The pandemic also cost Norway ten percent of its tax earnings. But the revenue loss can’t be spotted when looking at payments from regular tax payers.

Published: 25 January 2021 17:00 CET
Why Norway's earnings dropped in 2020 despite steady taxes from individuals
Photo: Giorgio Grani on Unsplash

While the state’s reduced income is linked to the Covid-19 pandemic, and the measures to combat the spread of the virus, individuals last year actually paid more tax than the year before. 0.8 percent, to be precise.

Yet the Norwegian tax revenue amounted to 858 billion kroner, 85.8 billion euro, last year, a 9.1 percent decrease from 2019, according to official figures from Statistics Norway (SSB).

Plummeting oil prices

The main driver of the decline is the reduced income from taxes on petroleum. The industry only paid 28 billion kroner, about 2.8 billion euro, in taxes last year. A staggering 80 percent drop from the 134 billion kroner paid the year before.

The petroleum industry is by far Norway’s largest economic sector. And, like all oil-exporting countries, Norway has been hard-hit by the sudden drop in demand ­– coupled with a global glut – for petroleum, noted, among others, by the OECD.

The impact of the pandemic on the international petroleum and crude oil market was undeniable when the barrel price plummeted from 45 dollars in March last year, to a record low at under 25 dollars in April. And all through the pandemic it fluctuated below 45 dollars, before eventually making a recovery in December, according to the overview from Business Insider.

Support investments

To help the industry weather the storm, Norway slashed its taxes and fees.

“Oil and gas industry is an important resource for Norway,” said Minister of Finance Jan Tore Sanner in a May press release.

“It is therefore important for the government to contribute to upholding the activity in the oil and gas industry and the suppliers to this industry in order to ensure that they make it through the Covid-19 crisis,” he continued.

The goal was to free up an additional 100 billion kroner, 10 billion euro, for investments.

Increased activity

The approach seems to have been successful. A recent report by the Norwegian Petroleum Directorate (NPD, ‘Oljedirektoratet’), concludes that activity on Norway’s continental shelf was bustling last year, despite the problems plaguing the industry in the rest of the world.

“While 2020 has been an unusual year in many ways,” said Director General Ingrid Sølvberg in NPD in a press release, “investments on the Shelf are at the same level as previous years.”

Fossil-dependent

Not everyone shares the enthusiasm, however.

Member of Parliament Kari Elisabeth Kaski from the Socialist Left Party thinks the investment level may increase Norway’s reliance on the fossil energy sector. This is particularly problematic, she believes, in a time where more resources and attention ought to be directed towards sustainable and green energy solutions.

“The reality is that one has given subsidies of such a magnitude that investments in oil have exceeded expectations,” she told newspaper Aftenposten in January.

“This makes Norway more dependent on oil, an unwise direction for Norway to take in the recovery of this crisis,” she continued.

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