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ANALYSIS: How will the 2022 budget change life in Norway?

Norway's 2022 budget provides for changes to income tax, fuel prices, childcare costs and electricity bills. The proposed budget now has the support required to pass through parliament. 

Published: 1 December 2021 13:07 CET
Pictured is a laptop and accountancy notes.
These are the key things you need to know about Norway's budget for next year. Pictured is a laptop.

The government agreed earlier this week on a budget with The Socialist Left Party. Barring unforeseen developments, this means the budget will have enough votes to pass through parliament later this week.

The full details and finer points of the budget agreed with the Socialist Left Party haven’t been fully revealed, and it’s unclear how much, if anything, has changed since the government unveiled its original budget last month. What we do know so far is detailed below.

What’s becoming cheaper

The government has consistently touted this budget as one for the people, stating its main aims are that those with the least get a fairer deal and those with the most pick up more slack. 

Cuts of around 50 percent to electricity tax between January and March, the months when bills are at their highest, are applied in the budget. 

READ ALSO: This is how much electricity in Norway will cost this winter

There will also be lower taxes for those who earn between 250,000 to 700,000 kroner per year and a tax credit of up to 5,170 kroner for those aged between 17 and 29 who earn less than 535,000 kroner per year. 

Union membership will become cheaper through the doubling of tax deductibles for members to 7,700 kroner. 

Childcare will also get cheaper next year. Firstly, the maximum price for a kindergarten place will be reduced. The maximum a kindergarten will be able to charge for a spot will be reduced from 3,315 kroner per month to 3,050 kroner. 

Furthermore, as part of the negotiations with the Socialist Left Party, it’s been agreed that all first-grade children will have access to a half-day place at an after school activity. In addition, planned cuts to financial support for children’s glasses and cuts in child allowances have been reversed. 

Dental work will become less costly for young people, with 21-and-22-year-olds receiving a yet to be confirmed discount on dentistry. 

Ferries should also become cheaper, and the government said when it unveiled its initial budget last month that 1 billion kroner would be set aside for bringing fares down. 

What’s becoming more expensive?

Norway’s bracket tax, an incremental tax paid based on your earnings and paid alongside the flat rate, will be raised for higher earners. In general, income tax will become higher for those who earn more than 643,800 kroner a year and the entry points for steps three and four for the incremental tax will be lowered. In addition, a fifth step for the highest earners, who make more than 2 million kroner, will be introduced. 

The cost of fuel will go up considerably due to hiked taxes on petrol and diesel. Petrol tax is set to rise to 1.60 kroner per litre, and diesel tax will increase to 1.87 kroner per litre.

The wealth tax will also go up. The overall rate will rise to just under 1 percent of individual net worth. Property will also be taxed more under the wealth tax, and a new step for those with the largest fortunes will be introduced, as a result of the negotiations between the government and the Socialist Left Party. 

Air travel will become slightly more expensive, too, as an air passenger tax will be reintroduced and will cost anywhere between 80 and 214 kroner, depending on the destination. 

What else do I need to know? 

Public transport will receive around 500 million kroner. This reverses an earlier position in which extra money for trains, buses and trams wasn’t planned despite warnings up and down the country that routes would be cut. 

Additionally, people laid-off because of the Covid-19 pandemic in 2021 will receive holiday pay next year, continuing a policy from 2020. 

Next year’s budget promises to be greener. A 28 percent bump to the CO2 tax for the oil industry has been announced, while Norway will not grant new oil exploration licenses in new or little-explored areas. 

READ MORE: Norway rules out 2022 oil licences in unexplored areas

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MONEY

EXPLAINED: How wealthy is the ‘average’ Norwegian? 

Norway is known for its high wages and stable economy. New figures have revealed the wealth of the average resident in the Nordic country. 

Published: 23 April 2024 15:50 CEST
EXPLAINED: How wealthy is the 'average' Norwegian? 

High salaries go hand in hand with the high cost of living in conversations about Norway.

However, other factors, such as high homeownership rates, indicate that there is plenty of disposable income for locals to save and invest in their futures. 

Previous studies have also suggested that Norwegians are the seventh wealthiest nationals in the world. 

Norway’s national data agency, Statistics Norway, has compiled its own set of figures indicating that the average Norwegian household has a net wealth of around 3.8 million kroner. 

Net wealth accounts for everything a person owns, including property, stocks, or cash, minus any debts or liabilities. 

The vast majority of this wealth was derived from the estimated value of property. This alone gives the average Norwegian an estimated wealth of 3.74 million kroner. 

READ ALSO: How much does an apartment in Norway cost?

The value of second homes was included, which skewed things as only around 10 percent of households owned a secondary residence. 

The average price of a home in Norway was 4.5 million kroner in March of this year, and house prices have increased substantially in recent years. 

Savings, cash, stocks and other capital accounted for 1.72 million kroner, giving Norwegians an average wealth of 5.46 million kroner. Average debts of 1.68 million kroner gave Norwegians an average net wealth of 3.8 million kroner.  

The figures from Statistics Norway were obtained using figures from tax returns for 2022, which were submitted in 2023.  

Those aged between 67 and 79 years old were the wealthiest generation in Norway on average. This is partly because they have more capital than most other groups and more expensive property. 

However, the most significant factor is the lower levels of debt. They had half the debt of the next richest group, those aged between 55 and 69. 

Younger age groups weren’t as wealthier as they had much higher debts and lower capital. 

Still, Norway’s wealthiest individuals significantly boosted the average. When using the median, the average Norwegian household had a net wealth of just under 2 million kroner. 

When the median was applied to capital, the figure was 339,300 kroner compared to the average of 1.76 million kroner. 

The large difference in capital was attributed to Norway’s wealthiest individuals significantly pulling up the average. 

“This is mainly due to large fortunes in shares and securities, where a few own very much. Shares and other securities and share savings accounts are assets with a median value equal to zero, which indicates that these are not important asset items for most households,” the report said. 

Money kept in the bank was still important for most residents of Norway, though. The median value of bank deposits in Norway was 215,000 kroner, compared to the average of 600,000. 

The gulf between the average value of property owned and the median was roughly 500,000, with the median being 3.25 million kroner. 

Furthermore, Norway’s median debt level was around 860,000 kroner compared to the average of 1.67 million kroner. Around 85 percent of Norwegian households were in some form of debt. 

Significant differences also exist between Norway’s wealthiest and poorest residents. Residents belonging to the country’s poorest ten percent had an average net wealth of almost minus 1 million kroner. 

Meanwhile, Norway’s wealthiest ten percent had a net wealth of 19 million kroner. The top 50 percent also owned considerably more than the bottom 50 percent. 

“Despite the former comprising 1.27 million households, while the latter comprises approximately 25,000 households, the bottom 50 percent own only 4 percent of the total net worth, while the top 1 percent owned as much as 22.3 percent in 2022,” the report read. 

There was also significant variation in wealth depending on household type. For example, a single mother or father with a child aged between 6 and 17 had a net wealth of 2.24 million kroner, compared to a couple with children of the same age with an average net wealth of 5.12 million kroner. 

Typically, households with more than one person had more money as more than one wage earner likely lived at the address. 

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