Finance Minister Siv Jensen has reason to smile after a long and difficult winter: New figures show a boom in unexpected tax revenue rolling into the state treasury, much of it tied to Norway’s economic recovery from the oil price collapse.
“This is another signal of optimism and brighter times,” Jensen told Norwegian Broadcasting (NRK) after learning this week that an extra NOK 13 billion (USD 1.68 billion) in taxes had been paid to the state just during January, February and March.
Total tax revenues collected during the first quarter were up 5.6 percent over the same period last year, according to the numbers compiled by state statistics bureau SSB (Statistics Norway). A total of NOK 249 billion had been paid in by March 31, compared to NOK 236 billion collected during the three months ending in March last year and NOK 231 billion the year before that.
The increase in tax revenues includes those coming from the country’s resurgent oil industry, and that’s the sector where growth was strongest. Tax revenue from oil activity fell last year (by 18.5 percent from March 2016 to March 2017) but it was up nearly 63 percent at the end of March this year. The NOK 15 billion collected as of the end of last month compared to just NOK 9 billion collected in the quarter ending March 31, 2017.
Jensen was also pleased that tax revenues paid into local governments were up, by 3.6 percent, even though her conservative Progress Party is firmly opposed to the property taxes that municipalities are allowed to impose. In Oslo, property tax revenues have exceeded all expectations because they’re based on market value assessments that have logged double-digit increases in the three years since Oslo’s Labour Party-led government introduced property tax in the capital for the first time. It has ended up affecting far more households than Labour had expected and has not been popular, especially when it hasn’t visibly improved conditions and service at the nursing homes and day care centers it was meant to finance.
Jensen is consoled by the tax revenue increases tied to businesses that have recovered from the oil price collapse or enjoy ripple effects from more economic activity in general. NRK reported that the higher tax revenues will also make it easier for her and her government colleagues to compile the revised state budget due next month.
“We expect that growth will continue, unemployment will continue to fall and hiring will grow faster than last year,” Jensen told NRK.