Tax refunds used to reduce debt

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Nearly half the Norwegian population received tax refunds averaging NOK 10,000 (USD 1,600) last week, but there aren’t many signs they went on shopping sprees. Rather, say bankers, the money seems to be used mostly to make extra loan payments in apparent efforts to reduce household debt.

June is often viewed as a good month for employees in Norway, because the majority receive both what’s called feriepenger (gross vacation pay from which no taxes are withheld) and tax refunds. A windfall for many, the deposits boost household cash-flow dramatically.

Silje Sandmæl, an economist at Norway’s biggest bank DNB, told newspaper Aftenposten that the bank’s own survey shows that 40 percent of Norwegians either put their tax refunds into savings or pay down debt. “They’ve maybe committed their vacation pay to vacations, but when the tax refunds come, many tend to save it or make extra loan payments,” Sandmæl said.

A survey by the SpareBank1 group showed much the same results, with 43 percent saying they’ll save their tax refunds and 25 percent will use them to reduce debt. Only 6 percent said they planned to go shopping.

newsinenglish.no staff