Labour promises hefty tax hike

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Norway’s Labour Party is openly promising that it will raise taxes by NOK 15 billion (USD 1.8 billion) if it wins back government control in the parliamentary election this fall. Labour claims the tax hike is necessary to preserve the country’s social welfare state.

Labour Party leader Jonas Gahr Støre and the party’s spokesperson on financial issues, Marianne Marthinsen, are heading into the upcoming election by promising higher taxes. PHOTO: Arbeiderpartiet

“The Labour Party wants a tax system that will generate jobs, create value and spread the tax burden in a fair manner,” said Labour leader Jonas Gahr Støre in presenting his party’s tax plans well ahead of the upcoming September election. Not many politicians head into elections by promising higher taxes, but Labour, which is running well ahead of Norway’s other political parties in public opinion polls, thinks it’s the right thing to do.

“We’re making this clear now, so that individuals and companies can have time to relate to it,” Støre told newspaper Dagens Næringsliv (DN), which broke the news late Wednesday that Labour was revealing its tax hike plans with quite a bit of detail. The NOK 15 billion would be raised over the four-year parliamentary term. “How it will be phased in depends on the economic situation,” Støre said.

No reinstatement of inheritance tax, though
Labour does not intend to reinstate inheritance tax in Norway, which was scrapped by the current Conservatives-led government coalition. Støre and Labour’s spokesperson for financial matters, Marianne Marthinsen, propose instead to raise NOK 5 billion through a higher formueskatt (Norway’s annual fortune tax on taxable net worth), NOK 5 billion through higher fees including three that are climate-related and aimed at cutting carbon emissions, NOK 3 billion tied to tax reform and NOK 2 billion in higher income taxes.

Store and Marthinsen insist, however, that those earning “moderate” incomes of NOK 600,000 or less a year will only end up paying a few hundred kroner in additional tax a year, while those earning up to NOK 1 million a year will probably see overall anual tax bills rise by around NOK 1,000-1,500 (USD 120-180). Norwegians with higher incomes of more than NOK 1 million a year (USD 120,000 and up) will need to pay several thousand kroner more a year in tax.

“Those with stronger shoulders will carry more of the load,” Støre told DN. “I think I can say to all our voters in all income groups that this is a fair manner in which to share the burden.”

Recouping current government’s tax cuts
The plan also is aimed at recouping around two-thirds of the roughly NOK 21 billion worth of tax relief that’s been offered by the current conservative government since it took power in 2013. Støre insists, though, that the vast majority of taxpayers won’t end up paying much more tax.

Marthinsen was challenged on that point during state broadcaster NRK’s live political morning talk show Politisk kvarter on Thursday. Everyone, not just high-income taxpayers, would face NOK 5 billion worth of higher regressive fees and taxes, but Marthinsen claimed consumers can avoid paying higher fees tied to various goods and services, for example, by “choosing” not to buy or use them. Critics contend that’s unrealistic, since many lower- or moderate-income taxpayers need to drive to work for example, and thus may have no choice but to pay higher fuel taxes.

By laying out its tax plans now, Labour was responding to calls by political opponents to clarify how “expensive” it would be to have them back in government. Some of Labour’s potential government partners, like the Socialist Left party (SV), may want to raise taxes even higher, so Labour may need to further boost its tax proposal. The Conservatives, meanwhile, have not yet revealed their own tax plans.

“We’re just trying to be as concrete as it’s possible and reasonable to be in advance of a four-year term (in office),” Støre said. Labour remains Norway’s single-biggest party based on recent public opinion polls and is expected to form a coalition, if needed, with its former government partners, the Center Party and Socialist Left. Berglund