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Friday, July 19, 2024

State won’t reel in fish-farming tax

A Norwegian professor hooked a new proposal this week to more heavily tax the country’s highly lucrative fish-farming operations. Norway’s conservative government and a majority in Parliament seem unlikely to reel it in but debate was flying, even before wealthy and indignant salmon producers dismissed higher taxes as “a Russian solution” fueled by envy.

Professor Karen Helene Ulltveit-Moe (right) handed her commission’s report to Finance Minister Siv Jensen, who’s unlikely to go along with tougher taxation of Norway’s fish-farming industry. PHOTO: Finansdepartementet/Kenneth Hætta

Quickly dubbed lakseskatten (the salmon tax), economics professor Karen Helene Ulltveit-Moe of the University of Oslo presented it to Finance Minister Siv Jensen just a day before Norway’s tax lists for 2018 were publicly released. They once again showed how the incomes and fortunes of Norwegian salmon producers, many of them based in small communities along the central and northern coast, remain huge. The three men behind the fish-farming operations Salmar, Firda Seafood Group and Alsaker Fjordbruk AS were all registered with personal fortunes of more than NOK 1 billion (USD 111 million). Several others had taxable fortunes of hundreds of millions of kroner. The market value of their assets may be much higher.

‘Must share their returns’
It’s exactly the fjordbruk (literally, use of the fjords) featured in Alsaker’s very name that’s prompted the call for more taxes. “In Norway we make it possible for business and industry to use our collectively held natural resources,” Ulltveit-Moe wrote in a commentary in newspaper Dagens Næringsliv (DN). “Then the companies must share their financial returns for the collective good.”

The government had formed the commission that Ulltveit-Moe led to examine taxation of firms licensed to use the seas. “We believe that a special tax should be imposed because  sea-based businesses exploit a limited resource that belongs to the people,” Ulltveit-Moe stated. “Our coast is well-suited for oppdrett (fish-farming), with the right temperature and protection in fjords and sounds. These advantages have led to half of all Atlantic salmon being raised in Norway.”

Fish-farming has become big business in Norway that a government-appointed commission thinks should be taxed harder. Here’s Fisheries Minister Harald T Nesvik visiting a salmon producer off the Helgelands Coast in Northern Norway. PHOTO: NFD

The country’s seafood industry ranks second only to oil in Norway, with much of it fueled by salmon production. The commission’s report notes that profitability of firms using the seas is around three- to four times higher than the industrial average in Norway. It’s gone from being a collection of small, start-up businesses to a billion-dollar global industry that also features large multinational corporations like Mowi, formerly Marine Harvest, controlled by shipping tycoon John Fredriksen.

It should therefore pay more taxes, concluded a majority on Ulltveit-Moe’s commission, specifically via an “extra tax” on fish-farmers’ “extra high” surplus since it’s been given protected rights to operate in areas of the seas that once had been open to all. Norway’s offshore oil- and hydroelectric industries already pay such extra taxes on extra-high profits in return for their use of the seas and waterways.

More bidding for licenses
The commission also unanimously urged bidding for new licenses to set up fish-farming operations. That’s more likely to be approved, but the extra tax proposal seems bound to be tucked away in a government office drawer. None of the government parties nor several others in Parliament support it and it’s also been trashed by both national employers’ organization NHO and Norway’s largest trade union confederation LO.

The opponents, including Norway’s seafood marketing council and the national organization Norsk Industri, argue that extra tax on extra profits would hinder investment in additional fish-farming operations and make Norwegian salmon and other farmed fish less competitive in the international market.

Opponents claim an extra tax on extra profits would hinder investment, like this new facility set up at sea. PHOTO: NRD

Salmon producers, moreover, are mostly Norwegian employers in the private sector who “create secure jobs in outlying areas and develop leading maritime technology,” opponents noted in a commentary in newspaper Aftenposten on Wednesday.  While they’ve clearly earned enormous amounts of money on their ventures, the tax opponents argue that Norwegian producers also face new competion from the “explosive” growth of fish-farming ventures from Chile to the US and Iceland.

“This (an extra tax) could be fatal for the industry,” Geir Ove Ystmark of Sjømat Norge, which promotes Norwegian seafood, told DN. He called the commission’s report “desk work that should be set aside as quickly as possible.”

‘Enough challenges already’
Others were more blunt and forceful in their criticism, blasting the commission’s proposal as “a Russian solution” and, on an NRK morning radio debate program Wednesday, that those advocating more taxes “are just envious” of the salmon producers’ profits. Ola Braanaas of Firda Seafood, who was among those listed with a personal taxable fortune of NOK 1,008,041,458 as of the end of last year, demanded to know whether it was  “wrong to build up a fortune in Norway.” He threatened to “flag out” his fish-farming operations if slapped with a new tax, even though then he’d no longer be able to sell his fish as “Norwegian salmon.”

Even LO defended the salmon producers’ “super profits” as necessary to retain and expand jobs along the coast. “The business is also already meeting challenges like salmon lice and climate demands,” Grethe Fossli, who represented LO on the commission, told newspaper Klassekampen. “New technology needs to be developed (for new fish facilities and even land-based pools) and that will require both competent workers and capital. We want the business to have enough muscle to keep developing.”

After working for a year on the government’s own request for an evaluation of tax on fish-farming, Ulltveit-Moe was clearly frustrated that her commission’s proposal failed to win much support. It may be revived, however, after the next election. PHOTO: Finansdepartementet

Fossli, along with NHO and a representative from the local government organization KS, were among the minority on the commission. They seem most likely to prevail, however, given the lack of political support for a new extra tax on salmon producers. Ulltveit-Moe is clearly disappointed, and so were some editorial writers on Wednesday.

“It’s not envy that’s behind the proposal to tax this industry harder than it is today,” editorialized DN. “It’s the fact that this business is more profitable than most others because Norwegian fjords offer some of the world’s best locations and because licenses are limited. Taxing (such profits) isn’t communism, it’s market economics in practice.”

DN called it “deeply disappointing” that “so many politicians have shot down this proposal before it was even launched.” Several Labour Party politicians still seemed determined to impose a tax, though, suggesting the commission’s report may be retrieved if they win the next parliamentary election in 2021. Berglund



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