After weeks of political turmoil and even speculation that her government might fall, Prime Minister Erna Solberg pulled her troops together once again on Wednesday as they headed into state budget talks. All four party leaders involved did their best to present a united front.
“We sit in this government because there’s more that unites us than divides us,” claimed Progress Party leader Siv Jensen, who also serves as Norway’s finance minister. She downplayed a recent highly public feud over road tolls with Trine Skei Grande, leader of the Liberal Party, noting that even though each individual party can be passionate about their own priorities, “we all agree on the general direction in which we’re going.”
Grande herself also claimed that the conflict had been put behind them after Solberg rammed through a compromise heading into last weekend. Grande added, however, as did another top politician from the Liberal Party, that there would be no more concessions regarding policy on such issues as climate measures and education.
Solberg launched a brief session with the press Wednesday morning by stressing how well the Norwegian economy is doing, with low unemployment and high job growth. “We’re having very good times with the economy in Norway,” Solberg said. “Our job is to make sure that this (Norway’s strong economy) continues. There are uncertain times around us. We have to be careful with how we use our money.”
Tax revenues higher than expected
Newspaper Dagens Næringsliv (DN) reported Wednesday on new figures showing how higher economic activity is sending record-high tax revenues into both state- and local government coffers. Jensen confirmed that the revenues this year will amount to NOK 5 billion more than predicted in the state revised budget presented in May.
“It’s because unemployment is low and employment is higher,” Jensen said, so more people are collectively paying more tax even though tax rates are lower. Tax receipts so far this year have surpassed NOK 80 billion, up 28.4 percent since 2013 when the current conservative coalition government took over. While inflation has remained low at 2.4 percent, annual tax revenue growth is up 4.25 percent.
Property tax ‘not needed’
Jensen claimed that the higher general tax revenues mean local governments should be able to remove controversial property tax and still operate at a surplus. Property tax is a big issue in the upcoming local elections, not least in Oslo where some property tax bills have increased as much as 32 percent after the Labour Party-led government not only imposed property tax but also raised the tax rate by 50 percent after the first year, from 2- to 3 percent of assessed value. Property assessments also have risen.
Oslo’s Labour-led government justified property tax by earmarking its revenues for elder care and day care. Jensen argues that reducing property tax can also amount to welfare, especially for pensioners with modest incomes but lots of equity in paid-off homes that now are taxed.
Rigmor Aasrud, finance policy spokesperson for Labour, rejected Jensen’s claims and accused her of making local governments’ economies look better than they are. She claimed many communities around Norway are still having a hard time funding their obligations including local schools, health care, elder- and day care.
Budget due in October
The state government’s compromise on road tolls, meanwhile, which involves turning more state funds over to local governments as long as they’ll use the money to cut road tolls and improve public transport, hasn’t been welcomed with entirely open arms. In Oslo, Greens Party leader Lan Marie Nguyen Berg has declared she doesn’t want the state funding offered and would rather raise road tolls instead. Her main goal is to drastically reduce driving in Oslo, as she also moves forward with removing thousands more parking places on Oslo’s streets.
The Christian Democrats, a minority member of the state government along with the Liberals, stated that its highest priorities in the latest round of budget talks are programs to reduce poverty and help reverse climate change. The Christian Democrats vowed to fight more tax relief measures, while also curbing use of Oil Fund money.
Jensen is due to present a final version of the proposed state budget for 2020, the first from a majority government in six years, right after Parliament reopens in October.
newsinenglish.no/Nina Berglund
