Norwegian tax authorities are cracking down on hair salons, car washes and other service firms that they think are charging unrealistically low prices. In the authorities’ minds, getting a haircut or car wash for as low as NOK 200 (USD 33) is suspicious, and suggests the proprietor isn’t paying minimum wages set by labour organizations or may be evading taxes.
“It just doesn’t add up,” Jan-Egil Kristiansen, tax crimes chief for the regional tax office Skatt Øst, told newspaper Dagsavisen. “If someone cuts hair for NOK 150 or polishes a car for NOK 200, and minimum (tariff) wages, employer taxes and VAT are paid, the employer can’t have earned anything.” Since many also deal in cash, it’s harder for the tax authorities to audit them, he admits.
New rules taking effect
So from January 1, the tax authorities will demand all salons, car care firms and eating and drinking establishments to maintain personnel lists that require documentation of who is working and when. Efforts are also being made to secure cash registers, to better control transactions and revenues.
Kristiansen thinks the measures will crack down on alleged tax evasion or even social dumping. For consumers, it can mean the end of less expensive options to the Norwegian salons that routinely charge the equivalent of as much as USD 100 or more (NOK 600-850) for a haircut. In Oslo, it’s not unusual for a trip to the hairdresser to cost more than a visit to the dentist.
Going to a frisør (hair salon) in Norway can be so expensive compared to prices in other countries that some budget-minded Norwegian residents wait to get their hair cut until they’re out traveling, since a haircut in Germany, the UK or US can cost a fraction of what it often costs in Norway.
In recent years, though, small salons have popped up in some Norwegian cities, often run by immigrants, that offer haircuts for as low as NOK 150 (USD 25). Kristiansen doesn’t think all are legitimate, and the organization representing the established and much more expensive salons is delighted by the tax office’s efforts to crack down on those who don’t “operate seriously.” Olav Eikemo of the organization claimed the higher-priced Norwegian salon owners welcome competition, but not if it’s “unfair.”
Kristiansen’s crusade against haircuts and car washes that he views as suspiciously low may further entrench Norway’s notoriously high prices but that doesn’t seem to bother him. He’s also urging the public to be more critical of low prices.
“If it’s too good to be true, it probably is,” he told Dagsavisen. “Folks must see that contributing to the black market has wide-reaching consequences.” Patronizing low-priced service establishments, he claimed, “can destroy businesses and threaten welfare.”