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Thursday, May 23, 2024

Budget battle ends well for leftist SV

Norway’s  Labour-Center government coalition was finally able late Monday to secure a majority in Parliament for next year’s state budget. After lengthy negotiations with the Socialist Left Party (SV), the pro-oil Labour and Center parties  even agreed to cancel Norway’s next round of offshore oil field licensing, in a major concession to SV and climate activists.

A relieved Prime Minister Jonas Gahr Støre on national TV Monday evening, after winning majority support in Parliament for his new government’s first state budget proposal. It’s greener and “better,” Støre said, than the budget his Labour Party and coalition partner the Center Party had hammered out.  PHOTO: NRK screen grab

Nor will the new government dip any deeper into Norway’s Oil Fund, the country’s huge sovereign wealth fund built up with oil revenues over the past 25 years. It will, though, cover holiday pay for workers laid off during the Corona crisis, financed in part by a tax hikes that will bring an estimated NOK 2 billion extra into the state treasury.

Carbon taxes on the oil industry will still rise by 28 percent, just like the former Conservatives-led government proposed. It will also offer NOK 500 million in Corona compensation to public transport systems that are having trouble luring passengers back on board. Prime Minister Jonas Gahr Støre claimed it’s Norway’s “greenest” state budget ever.

It also addresses several key social welfare issues, providing free after-school care for all first-graders, restoring state funding for eyeglasses for children, and offering dental care rebates to young adults aged 20-21. Public dental care will also be strengthened at the county level.

SV leader Audun Lysbakken had all reason to be pleased with the budget changes his party had demanded. PHOTO: NRK screen grab

Everyone earning more than NOK 643,800 a year will likely get hit with higher income taxes, while those earning more than NOK 2 million a year will be taxed at an even higher rate. A new higher tax level will also be imposed on those with large fortunes, while the standard deduction for Norway’s controversial tax on individual net worth will be raised to NOK 1.7 million per person.

Støre called it a budget “that favours business, emissions cuts and green policies, with real means of doing that.” Cancellation of Norway’s 26th oil field licensing round will effectively reduce more oil exploration and production in news areas of the Norwegian Continental Shelf, which even the United Nations has asked oil producing countries to do.

Opposition parties in Parliament were quick to criticize the minority government’s proposed state budget, which needed SV’s support to gain a majority. The conservative Progress Party’s finance spokesman Hans Andreas Limi claimed its “price for ordinary folks can be very high,” and he also blasted plans to cancel the openings of new offshore oil fields. Progress is even more pro-oil than Labour and Center, and now fears the resulting loss of exploration activity can threaten offshore industry jobs and “lead to a decline in value creation.”

The Conservatives also thinks the budget will hurt job creation and more heavily tax the “ordinary folks” that Labour and Center claim to represent. The Reds, however, don’t think the budget taxes Norway’s wealthiest hard enough. “The richest can breathe a sigh of relief,” claimed the Reds’ finance policy spokesperson, Marie Sneve Martinussen.

The Greens Party was pleased with the oil field licensing cancellation, but still claimed to be “disappointed” by the proposed budget’s climate and nature profile. Kristoffer Haug of the Greens also wanted more funding for public transport, as part of an ongoing effort to get people out of their cars. Berglund



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