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Saturday, April 13, 2024

Food tax unlikely to be lowered

Norwegians have long had to pay tax on food purchases as well as on all other goods and services. They’ll likely need to keep swallowing it, after a proposal to remove or lower the tax was not well-received.

The proposal came from a trade union federation, HK Norge, which thought that removing the 15 percent VAT on food, at least temporarily, would help Norwegians cope with rapidly rising food prices. It’s lower than Norway’s 25 percent VAT on all other goods and services, but further boosts the cost of a trip to the grocery store.

The proposal was similar to an earlier one to also remove VAT from Norwegians’ spiking electricity bills. The idea is to offer consumers some relief at a time when the state government is already raking in record-high tax revenues fueled by high prices.

An economics professor at NTNU, Ragnar Torvik, quickly vetoed the idea, claiming it wouldn’t help those needing relief most. Torvik, who recently headed a state commission on taxation, has actually proposed raising the food tax to 25 percent while lowering income taxes for those in low brackets and raising financial aid for students and those with children.

Politicians in the government parties seem to agree, with the Center Party’s Geir Pollestad, head of the finance committee in Parliament, told state broadcaster NRK that removing or cutting the food tax would cost the state around NOK 16 billion a year and could promt grocery stores to raise prices even more. staff



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