As the state budget dust settles on the conservative side of Norwegian politics, every single party on the left side is proposing budgets that contain billions of kroner in higher taxes. That’s not as controversial in Norway as in many other countries, but highlights clearer differences among the eight parties in Parliament, and clearer choices for voters.
As the Conservatives-led government coalition reached agreement with the Christian Democrats party on their state budget proposal for 2019 this week, their opponents in Parliament were busy cranking out their own budget proposals. News bureau NTB reported that the Reds (Rødt), which is the most left-wing of the socialist parties, led the way with total tax hikes amounting to NOK 39 billion (USD 4.6 billion). Income taxes alone would rise by NOK 12.3 billion. The Reds claim that much extra tax revenue is necessary to reduce social differences among Norwegians, for example by raising the income tax rate for those earning more than NOK 2 million a year to 41.3 percent.
“Everyone talks about increased differences, but very few are doing anything about it,” Reds leader Bjørnar Moxnes said on NRK’s national radio debate program Politisk kvarter. While raising income taxes and making them more progressive, the Reds also propose cutting VAT. Its flat rate of 25 percent on most goods and services hits low-income earners harder, it’s argued, than those with high annual incomes and assets.
‘Not really radical’
Norwegian taxpayers earning more than NOK 1.3 million a year would also face higher taxes under the Reds proposal, with the total amount collected meant to pay for such proposed welfare benefits as totally free day care for children, higher child welfare payments and subsidized dental care. The Reds, which currently have more voter support in public opinion polls than either the Liberal or Christian Democrats parties, want to turn over around NOK 8 billion of the new tax revenue to municipal governments, which are the primary providers of such welfare services as day care, elder care and schools.
“This really isn’t so radical,” insisted Marie Sneve Martinussen, deputy leader of the Reds, to newspaper Dagsavisen when its budget proposal was rolled out. The current conservative government coalition has cut income taxes by NOK 14.7 billion since it first took office in 2013. The Reds simply want to reverse most of that, and bring tax levels back to where they were.
“It’s not like tax is so nice itself, but it decides how much we can do for fellowship and society,” Martinussen said. “We’re not simply proposing higher taxes but a better society.”
Labour’s hikes lower
The much bigger Labour Party doesn’t want to fully reverse all the coalition’s income tax cuts but also is proposing an income tax hike that would raise an extra NOK 920 million. Labour also wants to reduce social differences and thereby proposes higher tax on net worth (formue skatt) that would amount to NOK 6 billion more than that raised in the conservative coalition’s budget.
Labour’s proposal has already sparked warnings from the chief economist at national employers’ organization NHO, Øystein Dørum, who calls Labour’s alternative budget “unfortunate.” NHO backs its measures to strengthen employee competence and cut carbon emissions, but thinks the tax hikes will “weaken value creation” in the long term.
The Socialist Left party (SV), meanwhile, wants to raise income taxes by NOK 3.8 billion by increasing tax rates for those with high incomes and reducing them for those earning less than NOK 600,000 a year. SV also proposes higher taxes on net worth and real estate.
The government coalition’s budget, which offers more income tax relief, is likely to be approved in Parliament, since the Christian Democrats’ support gives it a majority. Recent public opinion polls, however, show that the entire left-center side of Parliament now has more voter support than the non-socialist side. Labour leader Jonas Gahr Støre, who’s also enjoying a rise in voter support since losing last year’s election, is vowing tougher opposition and more clarity regarding tax and policy differences.
The three so-called “red-green” parties (Labour, SV and the Center Party) that formed the last Labour-led government remain on a collision course on some key issues, however, including fuel and vehicle taxes and on Norway’s trade deal with the EU. Labour and SV want higher fuel taxes while Center wants lower. Both Center and SV oppose the EU trade deal known as the EEA/EØS agreement, while Labour firmly backs it. The parties’ leaders claim they can either resolve or live with their differences, however.
“In order for the left side to win a majority again, we must stand together,” Labour Party Secretary Kjersti Stenseng told Dagsavisen during a labour federation conference in Gol this week. “Labour, as the largest opposition party, must take a leading role.” Stenseng claimed voters will also see clearer opposition to today’s government on important issues like labour and health policy, in addition to budget issues.