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Norway election: Is the Nordic swing to the left nothing but an illusion?

For the first time in decades, left-wing parties are set to be in power in all five Nordic countries after Norway's general election. But what does the left's success actually mean?

Norway election: Is the Nordic swing to the left nothing but an illusion?
Labour leader Jonas Gahr Støre is set to become the Nordics latest left-wing PM. Photo by Arbeidpartiet on Flickr.

The last time Norway, Finland, Denmark and Sweden all had social democratic prime ministers was back in 2001. And if you throw in Iceland, it has not happened since the 1950s.

The resurgence of left-wing parties elsewhere – particularly Germany – has led some to believe social democrat parties are finally making their way out of the doldrums.

“At the very least it crushes the notion some people have that social democratic parties are in splinters,” Norway’s probable next prime minister, Labour leader Jonas Gahr Støre, said on Tuesday.

According to him, his victory is a sign of the return of social democracy “as a leading political force”, in a “somewhat renewed” form that has struck a delicate balance between industry, employment and climate issues.

Norway’s Labour Party may have benefited from the current desire for a stronger state and fewer inequalities inspired by the pandemic, suggested Elisabeth Ivarsflaten of the University of Bergen.

But they were also better at containing the far-right populists, which have lost momentum in both Norway and Denmark.

“They thought very carefully about how to handle the populists, both in terms of rhetoric and strategy, and about the kinds of policies they need to adopt,” Ivarsflaten said.

In Denmark, the Social Democrats led by Prime Minister Mette Frederiksen have stolen the far-right’s thunder by adopting one of Europe’s most hardline anti-immigration policies.

Scandinavia, a bastion of social democracy in the post-war period, saw the right come to power during the crisis years in the 1970s and 1980s.

That paved the way for more regular power shifts over the years, as social democrats saw their election scores fall from between 40 and 50 percent, to 30 or even 20 percent.

Analysis: How the 2021 general election result could change Norway

No ‘harbinger of renewal’

Despite coming back to power, their popularity at the ballot box has hardly rebounded – they have benefited instead from increasing fragmentation on the right.

Norway’s Labour became the biggest party after Monday’s election despite garnering just 26.3 percent of the vote, their second-lowest score since 1924.

Once able to rule alone or with the support of a single smaller party, social democratic parties now find themselves having to build coalitions with two or even three partners, forcing them to make compromises and concessions.

In Sweden, they were able to retain power in a 2018 vote but posted their lowest score in a century and had to build a minority coalition with the Greens supported by two centre-right parties.

At the end of the day, “it’s a weakened social democracy”, concluded political scientist Jonas Hinnfors of the University of Gothenburg.

He attributed social democracy’s recent election successes to divisions on the right and the centre, rather than a real revival on the left. Yohann Aucante, a Nordics expert at the EHESS social sciences university in Paris, agreed.

The current “five for five” is actually “very fragile … it’s not a harbinger of a renewal of the left in Scandinavia”, he said.

“The paradox is that all of these parties have problems and dilemmas.”

“In Norway … it’s oil, with the social democratic youth wing forcing the party to backtrack on oil exploration, whereas if they had listened to the union factions the choices would’ve been very different,” he said.

Meanwhile, the Nordic grand slam could be short-lived.

Iceland goes to the polls on September 25th, when the right-wing Independence Party, currently a member of the left-led government, hopes to reclaim the post of prime minister.

And in Sweden, which holds its legislative elections a year from now, opinion polls suggest the right-wing could come to power, possibly with the support of the far-right for the first time.

Article by AFP’s Marc Préel, with Pierre-Henry Deshayes in Oslo

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TAXES

Who will be affected by Norway’s new exit tax and how will it work?

Norway's government is moving forward with plans to enact stricter tax regulations for people leaving the country. The Local contacted the Ministry of Finance to find out the details.

Who will be affected by Norway's new exit tax and how will it work?

A new exit tax is in the works, the Norwegian government announced recently. 

READ MORE: What we know so far about Norway’s plans for an exit tax

The proposed changes aim to close loopholes within the existing tax system, particularly concerning the taxation of gains made on shares while residing in Norway and moving assets abroad.

Under the proposed regulations, those who have left Norway after March 20th, 2024, would be subject to taxes on gains of more than 500,000 kroner that they have accrued while in Norway. 

This move comes as part of the government’s efforts to address a recent outflow of wealth from the country, with Switzerland being a popular destination for tax exiles from Norway.

READ MORE: Why Norway has continued to see an exodus of wealthy residents

Who would be affected – and how would it work?

The new tax would affect both foreigners and locals – as long as they’re tax resident in the country, State Secretary Erlend Grimstad at the Ministry of Finance told The Local.

“The Norwegian exit tax rules, both the current ones and the ones being proposed, would affect natural persons who are tax residents in Norway,” he said.

The tax settlement process upon departure from Norway would require people to address their tax obligations related to gains exceeding 500,000 kroner on shares acquired during their time in Norway.

Emigrants would have several options for fulfilling this tax obligation, including immediate payment, interest-free instalments spread over 12 years, or deferred payment with accrued interest.

“Exit tax on shares will be imposed on individuals who terminate their tax residence in Norway, either according to Norwegian tax law or the applicable tax treaty.

“The rules also apply when an owner resident in Norway transfers shares as a gift to a person resident outside Norway,” Grimstad said, further noting that the new rules would only apply if the deemed net gain at the time of departure or transfer exceeded 500,000 kroner.

When could the new rules enter into force?

The consultation period for the new exit tax proposal began on March 20th and will last until May 21st, 2024. Thus, stakeholders and the public will have the opportunity to provide feedback and insights for the next two months.

Following this period, the proposal will undergo review and potential adoption by the Norwegian parliament (Storting), with the government needing majority support for implementation.

READ MORE: Does Norway really have some of the highest taxes in the world?

However, if the rules are passed, they will apply from March 20th, 2024, Grimstad told The Local.

“This is necessary to counteract tax adaptations in the time between publication of the proposal and adoption of the changes in the Storting,” he said.

The reasoning behind the new exit tax

Commenting on the exit tax developments last week, Norwegian Finance Minister Trygve Slagsvold Vedum said that it was important to uphold the principle of fairness in the taxation process, noting that people should contribute taxes on assets accumulated in Norway.

However, the proposed regulations also include provisions for those intending to return to Norway within the 12-year timeframe, ensuring that their tax liability would be adjusted accordingly.

“When you relocate, it’s only fair that you contribute taxes on what you’ve earned or gained in Norway. However, this process must be reasonable, hence the 12-year rule. Some people may wish to reside abroad temporarily and eventually return home,” Vedum said at the time, according to the Norwegian Broadcasting Corporation (NRK).

The proposed exit tax would extend beyond shares to include gains from share savings accounts and fund accounts. Additionally, transfers of shares with subsequent gains to people residing abroad, such as relatives, would trigger the tax if gains exceed 100,000 kroner, a reduction from the previous threshold of 500,000 kroner.

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