Finance minister to cut company tax

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Norwegian Finance Minister Siv Jensen will set up an expert panel to review ways of cutting Norway’s high company taxes. The Progress Party leader (Fremskrittspartiet, Frp) said business tax rates are far higher than those of neighbouring countries, and reducing the difference will be a key priority in the coming year.

Finance Minister and Progress Party Leader Siv Jensen has promised corporate tax cuts in the upcoming March budget, and says all other fees and levies will also be reviewed. PHOTO: Rune Kongsro/Finansdepartementet

Finance Minister and Progress Party Leader Siv Jensen has promised corporate tax cuts in the upcoming March budget, and says all other fees and levies will also be reviewed. PHOTO: Rune Kongsro/Finansdepartementet

“There’s no doubt we have a gap to seal, especially if we also consider proposals for further tax reductions in the countries around us,” Jensen told newspaper Dagens Næringsliv (DN). “We have a situation where high Norwegian company tax distorts competition, to the detriment of Norwegian businesses.”

The growing gap between corporate tax rates in Norway and neighbouring countries is due to significant cuts internationally in recent years. Until 2005, Norwegian company taxes were in line with or lower than taxes in Sweden, Denmark, Finland and Great Britain. Now those countries’ business tax rates are between 20 and 22 per cent, compared to Norway’s 27 per cent.

The government has already presented one budget after winning office in September. Jensen can’t yet reveal the government’s planned changes ahead of 2015’s first budget conference in March, but says tackling corporate tax will be one of the major challenges. She has already written to Hans Henrik Scheel, director of Statistics Norway (Statistisk sentralbyrå, SSB) and the leader of a tax committee which advised the previous Labour Party government. The finance ministry has asked the tax committee for proposals on net tax cuts, taking into consideration depreciation rules.

More taxes for the axe
The finance department also plans to review all fees, to determine whether they’ll be maintained, removed or changed. “I have signaled that the government has ambitions for overall reductions in the level of taxes and fees,” Jensen told DN. “It will therefore be no surprise that the government’s coming with this. We’ll leave no stone unturned and review all charges to decide if they’ll survive.”

Jensen has not specified which levies are in the government’s sights in the upcoming budget, but has promised taxes and fees will be lowered. “Some fees are very effective and less problematic, while others can be seen as completely unnecessary,” she explained. “We see it with fresh eyes – also fees and systems which have been there forever.”

It’s hoped tax cuts will increase economic activity and result in new tax revenues for the state. The proposals are in line with the Progress Party’s alternative budgets in previous years, which have predicted extra tax revenues but been criticized by the other political parties.

“The government is very concerned with getting a better methodology to calculate the dynamic effects,” Jensen explained. She said those effects have been significant in other countries, but haven’t been calculated in Norway. “Now we’re developing the tools to better do those investigations, we’re doing part of the preparations already and we’ll link that to the Scheel committee’s work.”

newsinenglish.no/Emily Woodgate