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Tuesday, June 25, 2024

Compromise ends state budget battle

After weeks of arguments complicated by the rapidly rising costs of the refugee crisis, Norway’s government has finally struck a compromise with its two small support parties in Parliament. Their heated budget battle was drawing to a close Monday morning after they’d shifted around NOK 6 billion (USD 700 million).

The Norwegian Parliament (Stortinget) was under heavy armed Wednesday morning, with all surrounding streets cordoned off, after a man threatened to blow up the building. PHOTO:
The Norwegian Parliament (Stortinget) has been the site of heated budget battles over the past several weeks, but now an agreement looms for next year. PHOTO:

Only formalities remained following budget talks in overtime, reported Norwegian Broadcasting (NRK). “Now we see the contours of an agreement,” Hans Andreas Limi, finance policy spokesman for the Progress Pary, told NRK late Sunday night after another day of marathon talks. More meetings were scheduled Monday morning with a formal agreement expected by midday.

Prime Minister Erna Solberg also was confident of agreement after talks ran through the weekend. “There have been some tough rounds, but it’s been a positive trend,” Solberg told reporters. She blamed the drawn-out negotiations on “many major issues,” not least climate and environmental mesaures and the costs of caring for asylum seekers.

Refugees forced reshuffling of priorities
The influx of refugees into Norway has increased enormously since Solberg’s government put its state budget proposal together earlier this year, and also since the budget was first presented in early October. Costs rose by at least NOK 9 billion for next year alone, meaning that the money had to be found by making cuts elsewhere in the budget.

NRK and several other media outlets were reporting that one of the biggest reshuffling of priorities involves the use of funds in the portion of the state budget devoted to foreign aid. Both of the government parties, the Conservatives and Progress Party, wanted to use more than NOK 4 billion of the funds set aside for foreign aid to help pay for the costs of accommodating asylum seekers now in Norway. The government’s two support parties, the Christian Democrats and Liberal parties, managed to get that pared down by more than half, to NOK 1.8 billion.

Instead, Norwegians who’ve been enjoying record-low electricity rates will now have to pay more tax on their consumption, reported NRK. The national tax called el-avgiften will rise by NOK 1.50 per kilowatt hours. Sales tax on automobiles was also expected to rise, but fuel taxes wouldn’t be hit so hard, a victory for the conservative Progress Party.

Less tax relief
It will be more expensive to fly on both domestic and international routes except on those to outlying districts in Norway that rely on air transport. NRK reported that retired couples will still get potentially higher pension payments, though, and the state will also, on a trial basis, assume more responsibility for elder care.

Details of the state budget now expected to be approved in parliament remained unclear, but there will be less tax relief than what the government initially proposed. The main quarrels involved taxes tied to automobile use, climate issues and over how much of Norway’s oil revenues should be used in the current budget. The huge and unexpected costs of accommodating the tens of thousands of asylum seekers arriving in Norway were only addressed for the upcoming year, and will continue to be a major budget challenge in the future. Berglund



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