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Wednesday, June 12, 2024

Labour broke tax vows around Norway

Labour Party leader Jonas Gahr Støre has asked voters to rely on his promise that a government led by him won’t raise taxes by more than NOK 15 billion over the next four years. His own party, however, has repeatedly broken its tax promises made in all three cities where Labour took over for the Conservatives after the last municipal elections in 2013.

Labour Party leader Jonas Gahr Støre has promised that he won’t raise taxes by more than NOK 15 billion (USD 1.9 billion) over the next four years if he becomes prime minister. His fellow Labour Party politicians have broken tax promises in Oslo, Bergen and Tromsø, though, raising questions about Labour’s credibility on tax issues. PHOTO: Arbeiderpartiet

Støre has promised that if he becomes prime minister, his government not only will “guarantee” a cap on tax increases of NOK 15 billion but also promise that taxpayers earning NOK 600,000 or less won’t experience any tax increase. They may even experience a tax reduction.

Newspaper Aftenposten, however, has already calculated that Labour’s national tax hikes will amount to just over NOK 16 billion according to its own alternative state budget proposals. More worrisome, according to state broadcaster NRK, is Labour’s track record on keeping its tax promises in three of Norway’s biggest cities. Tax levels, meanwhile, have emerged as one of the major campaign issues in the current parliamentary election campaign, with the Conservatives vowing to reduce taxes and Labour warning they’ll raise them.

Labour’s property tax hits more, and harder
In Oslo, where Labour won the 2015 election after nearly 20 years of rule by the Conservatives, property tax was imposed within six months and ended up affecting far more people than Labour’s city government leader Raymond Johansen had said it would. He had claimed that “circa two of every 10 homeowners will have to pay property tax according to our proposal.” He also claimed that no owners of apartments in the housing cooperatives known as OBOS would have to pay property tax, because of a standard NOK 4 million exemption on the property’s market value.

Labour’s Raymond Johansen, shown campaigning here in Oslo in 2015, promised that only 20 percent of Oslo homeowners would get hit by property tax and that no owners of OBOS apartments would get tax bills. Both promises have been broken and property tax bills nearly tripled from 2016 to 2017. Johansen blames the increase in higher market values. PHOTO: Arbeiderpartiet

Two years later, fully 25 percent of all homeowners in Oslo have to pay property tax including at least 2,500 owners of OBOS apartments. The property tax rate was also increased by 50 percent at the same time property assessments jumped because of last year’s rise in market values. Property tax bill thus have become much higher than expected as well.

Johansen, who has worked closely with Støre for years, refused on Wednesday to take responsibilty for the property tax reality. “I was referring to OBOS’ own calculations, and not anything the Labour Party had figured out,” he told NRK. “When an OBOS apartment is suddenly selling for more than NOK 10 million, I don’t think it’s surprising for folks that property tax is assessed on a few of the most expensive  units.”

He added that since housing prices have been falling in the Oslo area and elsewhere, the reductions “will of course be reflected in how many homes will be face property tax.”

Bergen and Tromsø homeowners also betrayed
In Bergen, local Labour Party politician Harald Schjelderup had made a written guarantee in 2015 that property tax would not increase if he became head of the city government (byrådsleder). After the election, Labour increased property assessments on commercial property by 10 percent in cooperation with the Christian Democrats and the Liberal parties. They’re now collecting NOK 69 million more in property tax this year than in 2015.

Schjelderup nonetheless denies taxes have risen. “No, the tax formula is still the same,” he told NRK. “The fact that revenues from income tax have increased is because of the increase in real estate prices.”

NRK reported that Labour’s most serious broken tax promise occurred in Tromsø. Before the election, Labour’s candidate to head Tromsø’s city government, Kristin Røymo, said she planned to increase property tax by 0.4 percent and that the increase would cost homeowners “between NOK 15 and 40 per month,” or no more than NOK 480 a year.

A few months later, during Labour’s first round of budget negotiations, property taxes were raised by an average of NOK 3,007 per year, in cooperation with the Socialist Left and Reds parties. That’s more than six times what Labour promised.

“The increase can be blamed on the economy,” Røymo, who now serves as mayor of Tromsø, told NRK. “Our costs were too high and income too low. That demanded contributions from everyone. We launched a major restructuring program  and also cut politicians’ salaries by NOK 10 million.”

‘I will keep the promise I have made’
Støre, confronted with the broken promises of his Labour Party colleagues, preferred to talk about his own campaign promises on taxes. “My responsibility now is to be the leader of a (national) government project. I will keep the promise I have made: Up to NOK 15 billion and not over that. Ordinary folks will have the same or lower taxes.

“It’s been a bit different in the cities, but I think Oslo and Bergen have kept their promises while the housing market has risen, making more subject to property tax. Tromsø is in another situation, because they took over what could be seen as a bankrupt city after the Conservatives. They were open after the election in saying that taxes had to rise somewhat.”

Asked what he would say to folks who feel betrayed by Labour in Oslo, Bergen and Tromsø, Støre replied: “How shall we fulfill the major assignments in the future? I know it’s not a winning position to go around and say that we’re going to increase taxes, but it’s responsible and clear. And we’ll set a limit as to how much and we’ll keep that.”

‘Has no credibility’
Støre’s rivals in the race for national government leadership, Prime Minister Erna Solberg of the Conservatives and Finance Minister Siv Jensen of the Progress Party, have both promised tax reductions and that voters have to make up their minds whether they can trust Støre’s promises.

“I think folks can decide for themselves,” Solberg told NRK. “They see what’s happened at the local level and they remember what was said before the election.”

Jensen had a clear opinion of her own: “Labour has no credibility when it comes to tax promises. Experience shows that they break their promises to the disadvantage of the taxpayers. All these examples from Oslo, Bergen and Tromsø document that. Many more have to pay taxes and many have to pay more than they were told. That’s what voters also risk on the national level if Labour comes to power again.” Jensen’s party is heading into the election on a platform that includes making property tax, which can only imposed by local governments, illegal. Berglund



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