As Norway’s April 30 deadline for filing tax returns draws near, Norwegians are being reminded of what they actually can cost the state over the course of their lifetime. An unusual accounting exercise presented by state broadcaster NRK put the tax burden in perspective this week, and can make it look like a surprisingly good deal.
Individual Norwegians often claim “jeg betaler min skatt med glede,” that they gladly pay their taxes. The claim is usually accompanied by a smile, and it’s often viewed as scarcasm, especially after scores of the wealthiest Norwegians have moved to tax havens abroad. There are also many Norwegians who drive over the border to shop in Sweden, where prices can be lower, while tax-free shops at airports are large and busy.
At the same time, many Norwegians agree that they get a lot in return for their taxes, from heavily subsidized child care, schooling and tuition-free universities, to fully covered hospital care and visits to their primary care physician that cost the equivalent of around USD 25. It currently costs around USD 130 a month to send a child to a day care center in Oslo from 8am to 4pm when parents are at work. Elder care is under pressure but also available for a fraction of what it actually costs. State pensions are assured for generations to come, not only through tax revenues but also Norway’s huge sovereign wealth fund built up with offshore oil revenues. Norway has no state budget deficit.
Norwegian Broadcasting (NRK) summed it all up this week in a report that mostly focused on what each Norwegian costs the state, instead of what Norwegians pay in taxes on income (35 percent on average) and net worth (1 percent). The numbers, put together by economists at state statistics bureau SSB (Statistics Norway), were a real wake-up call for many.
“The state invested a lot in you even before you were born,” NRK reported, given all the free pre-natal care and hospital births that cost the state around NOK 100,00 (USD 10,638 at today’s exchange rate). That’s the starting point for SSB’s statisticians who calculated what a Norwegian costs from birth to death, taking in everything from schooling to health care, police protection and emergency assistance, legal help when needed, snow-plowing in winter and street-cleaning in summer, even funeral costs.
Day care costs per year amounted to NOK 170,000, schooling up to the age of 10 cost NOK 3 million, after-school care and programs cost NOK 30,000 per year, high school cost NOK 120,000 per year and university costs seemed low compared to most countries, at NOK 600,000 (around USD 64,000).
Then comes “pay-back time,” when Norwegians start paying income taxes. Norwegians tend to start full-time jobs later than, for example, most Americans because high school runs until the age of 19, after which many take a “free year” off for travel, special projects or to sign up for military service. Many don’t complete college until their mid- to late 20s.
“Over the next 40 years, the welfare state gets more from you than what you cost,” wrote NRK, unless there are problems along the way. Norwegians can get sick, have accidents, need help and need sick leave or disability pay.
By the age of 30, according to SSB, the average Norwegian has received health care services alone amounting to NOK 1.4 million. And then they may have children, triggering more medical costs plus those tied to the child and, not least, the costs of Norway’s maternity- and paternity leave programs that extend over at least a full year with one of the parents off work at full pay.
Then come all the variables, like the costs of landing in court where the state pays the costs of a defense attorney, or prison. Or other calamities that demand special services that the state provides. By the age of 50, the SSB experts figure a Norwegian has cost the state NOK 10 million before all the post-retirement years when pensions are paid out and medical needs often rise. People fall on the ice or elsewhere and break hips, for example, even though the welfare state has also paid to spread gravel on sidewalks and roads.
The state can also help with funeral costs if necessary, after years of nursing home residence. All told, SSB’s grand total of lifetime costs from birth to death and all of the above, plus use of roads and other public infrastructure, amounts to nearly NOK 30 million (USD 3.2 million). Men cost an estimated NOK 28.2 million and women NOK 31.7 million.
Norwegians contribute millions to help cover those costs, through all the taxes they pay plus fees, road tolls and not least Norway’s 25 percent VAT on goods and services. The average Norwegian man, according to SSB, contributes nearly NOK 26 million in tax and fee revenue over the course of a lifetime while women contribute NOK 14 million, mostly because they earn less as a whole and often take on most responsibility for family- and elder care.
The gap between Norway’s tax revenues and costs worries state officials and is a source of constant political debate. Finance Minister Jens Stoltenberg calls the Norwegian welfare state a spleiselag, or “potluck” of sorts, where the goal is for everyone to contribute what they can and receive what they need, while tax revenues are managed in the “best possible manner.”
That leads, of course, to political debate over priorities among the nine parties represented in Parliament, and governments are constantly under pressure. That will continue for lifetimes well into the future.
Meanwhile, Norwegian taxpayers going through their annual financial assessments and tax filings this month can perhaps feel a bit better about how it all works, and that they’re getting quite a lot for their money in the long run. Norway has, after all, long ranked in various international surveys as among the happiest nations in the world.
NRK’s visual report can be seen here, but only in Norwegian.
NewsinEnglish.no/Nina Berglund
