Study shows taxes not so high

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Norway is often viewed as a high-cost and high-tax country, but a new study by accounting and consulting firm KPMG suggests otherwise. Norway wound up far down the list of countries when ranked by effective taxes and fees.

Belgium topped the list, with an effective overall tax rate of 34.8 percent and social security fees of 13.1 percent. In the number-two spot was Croatia, followed by Greece, Germany and Italy. All told, the European average tax level on an income of around USD 100,000 a year (NOK 525,000) was 40 percent.

Norway was in 25th position, behind countries like Great Britain, Turkey and Poland and just ahead of Canada and Argentina. Norway’s effective tax rate was set at 22.6 percent with social security fees (trygdeavgift) at 7.8 percent, for a combined rate of 30.4 percent.

Norway’s high tax reputation, noted Cathrine Bjerke Dalheim of KPMG, is largely based on high levels of highly visible taxes like the country’s 25 percent VAT, which functions like a sales tax, and on tobacco and alcoholic beverages. Actual income taxes and the lack of property taxes in many municipalities leave Norway coming out better than, for example, Denmark, which has higher taxes on cars and other goods.

“There’s more to life, after all, than whiskey and cigarettes,” Bjerke Dalheim told newspaper Dagens Næringsliv (DN). Norway’s high-tax reputation is subject to “great modifications,” she said.

The country is known for aggressive tax collection, though, aided by a transparent economy where most transactions and bank account balances are routinely reported in to the authorities. Countries like economically ailing Greece have a combined tax burden far higher than Norway’s, but tax collection has suffered amidst an underground economy, which is partly why Greek authorities have now asked Norway for help in improving tax collection systems.

Views and News staff