Biodiesel tax clears Parliament

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Norway’s Labour Party hammered through the controversial repeal of a tax exemption on biodiesel during the night. Prime Minister Jens Stoltenberg’s victory, however, is being called “the first nail in the coffin” for the coalition government he leads.

Members of both the parties that serve as Labour’s coalition partners and the opposition in Parliament were predicting Friday that Stoltenberg’s so-called “red-green” (leftist, environmentalist) government will fall before the next election — because Labour isn’t nearly “green” enough to satisfy its partners, the Socialist Left (SV) and the Center Party (Sp).

Stoltenberg kept arguing that the new tax on biodiesel was necessary and fair, because even vehicles running on the more environmentally friendly fuel cause wear and tear on Norway’s roads. Motorists, he claimed, should thus pay their share of tax revenues earmarked for road maintenance.

Part of approved state budget

The government had inserted the new biodiesel tax into its budget proposal, which ended up clearing the Parliament by a vote of 86 to 83. It was the only item in the budget that sparked extended debate, which started around 10pm and extended well past midnight.

Members from all four opposition parties in Parliament voted against the budget but the government has a majority in Parliament and members of the government parties voted loyally. Newspaper Aftenposten reported that they’d been threatened with an immediate government collapse if they didn’t.

The opposition parties believe Stoltenberg used what’s known as the threat of kabinettspørsmål (a vote of confidence in the government or, internally, in its unity). That’s because Sp MP Per Olaf Lundteigen had said he would vote for the budget and its biodiesel tax provision even though he was against it, fearing the alternative was a new government led or supported by the Conservative Party (Høyre) . He made it clear that Sp members only went along with the budget vote to keep the government together.

New tax battle looms

Siv Jensen, leader of the Progress Party, told Norwegian Broadcasting (NRK) Friday morning that she doesn’t think the government will last beyond 2011. Members of the youth factions of both SV and Sp seemed to agree, saying the biodiesel tax and Stoltenberg’s “arrogance” can lead to a government crisis.

Stoltenberg denied he’d forced his government partners to go along, but refused to divulge details of the internal processes that led to the biodiesel tax. Labour officials reportedly are irritated that SV and Sp are alluding to Labour as an environmental retard.

Opposition parties vow a new battle over the tax next spring. It’s unpopular because it will make biodiesel more expensive and already has cut off investment to the biofuels industry. One producer in Fredrikstad already has shut down and laid off all its employees.

Others have said the biodiesel issue has led to a “confidence crisis” between the government and everyone working towards development of renewable energy.