Taxes can usher in sharing economy

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A government-appointed commission has cleared the way for the sharing economy to spread in Norway, as long as new services like Airbnb lodging and Uber transport are taxed. The commission believes such services provide more competition and offer more choices for consumers, but labour unions and not least the taxi industry raised immediate objections.

Traditional taxis in Norway will be deregulated if the commission’s regulations are adopted, clearing the way for both taxis and Uber. PHOTO: newsinenglish.no

The commission’s report may, as newspaper Aftenposten noted on Tuesday, set the framework for how the new delingsøkonomi (sharing economy) can better function in Norway. It won’t be easy in a country where labour federations like Unio and LO are strong, as are employer organizations like NHO. Both have already been calling for restrictions on Airbnb, which NHO claims competes unfairly with the hotel industry at present, while unions and Norway’s taxi federation fears social dumping. Uber drivers in Norway have recently faced a police crackdown, much to the delight of regulated taxi drivers who also have claimed Uber represents unfair competition.

The highly regulated and expensive taxi industry now may be set free, for example, but only on the premise that new sharing services like Uber pay tax as well. Tommy Staahl Gabrielsen, leader of the commission that presented its report to Finance Minister Siv Jensen on Monday, said the commission believes that current regulations on the taxi industry do not function well. Even though local taxi monopolies were broken up several years ago, the entry of new players has resulted in higher, not lower, taxi fares.

Breaking down barriers
A majority on the commission believes that “barriers to establishing new services in the taxi market should be reduced so that new players can establish themselves, with the terms of competition the same for new and traditional players,” their report reads. The commission proposes doing away with the current licensing (løyve) system for taxi drivers that has limited their numbers, while individual drivers would still need a kjøreseddel, a form of driving permit that registers hours on the job. That would allow Uber drivers to become as legitimate as taxi drivers are now.

“That amounts to social dumping,” Øystein Trevland , leader of Norges Taxiforbund, told newspaper VG. “Then there will be so many drivers that nobody could make a living at it.” Carl Edvard Endresen, leader of Uber in Norway, countered that the transport sector in Norway has the most to gain by setting up a framework and “level playing field” for the sharing economy.

“By using the existing car park better, we’d get more people into more cars and thus reduce the need for everyone to have their own car,” Endresen told Aftenposten. “That would require the current regulations for the taxi branch, with demands for taxi meters and an obligation to be available to drive, to be changed.”

Gabrielsen also noted that the commission recommends that safety, security, price information in advance and quality would still be demanded of all drivers issued permits to carry passenger. All drivers would also be required to register all trips and prices and deliver that information in to tax authorities. Taxi drivers would no longer be required, meanwhile, to have taxi driving as their main source of income, a factor that has contributed to higher fares in Norway

The only member of the commission that voted against the proposed deregulation of the taxi industry was LO secretary Trude Tinnlund. Her labour federation, Norway’s largest, pointed out that taxi drivers currently are part of the collective labour force and thus would face less job security and welfare benefits. She also voiced concern that deregulation may lead to a shortage or lack of taxi drivers in outlying areas, leaving them without taxi service of any kind.

No limits on lodging, but taxes likely
In the lodging sector, meanwhile, the commission supports the entry of Airbnb into the Norwegian market because it represents an alternative to hotels, an expansion of the accommodation industry and increased choice for consumers. Airbnb also “offers price competition,” Gabrielsen said, adding that the commmission “sees no need to limit” services like Airbnb.

Norwegian residents offering even short-term lodging in their homes, however, should pay tax, according to the commission. Platforms like Airbnb where travelers are matched with lodgers should also be required to report transactions to tax authorities, while tax rules for small amounts of income should be simplified.

LO and other union organzations that stand to lose members, also complain that the commission report hasn’t addressed how the sharing economy can exempt companies like Airbnb and Uber from Norwegian laws making employers responsible for employees, while dumping wages and working conditions that now would be the responsibility of individual players themselves. “We are in favour of exploiting new technology, but the challenges it presents are very old,” Tinnlund stated.

While the unions have sent formal written objections to the commission’s recommendations to Prime Minister Erna Solberg of the Conservative Party, the recommendations were received with a smile by Finance Minister Siv Jensen of the Progress Party. Both government parties generally favour deregulation.

The commission’s recommendations also received support from employers’ organizations NHO and Virke. Both stated they were glad the commission addressed the need for taxation of services like Airbnb, while IKT Norge, another industry organization in the technology sector, said the report has in practice accepted and approved the sharing economy. The report will now be sent out to hearing, with the finance ministry also receiving recommendations on how taxation should be handled.

newsinenglish.no/Nina Berglund