Norway budget: growth at a time of redundancies / News / The Foreigner

Norway budget: growth at a time of redundancies. The Progress Party’s (FrP) Siv Jensen put forward her very first budget as Minister of Finance, Wednesday. The government says it wants to promote an efficient use of resources and ensure that the Norwegian economy is flexible in the face of oil industry changes. Targeted tax reductions are in this year’s draft National Budget 2015 proposal. Infrastructure, productivity, and competitiveness are also priority areas. The government forecasts a 2% growth in the Norwegian mainland economy (non-oil) both this year and next.

tax, income, vat, budget, spending, oil, norway



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Norway budget: growth at a time of redundancies

Published on Wednesday, 8th October, 2014 at 14:14 under the news category, by Michael Sandelson   .
Last Updated on 8th October 2014 at 14:34.

The Progress Party’s (FrP) Siv Jensen put forward her very first budget as Minister of Finance, Wednesday. The government says it wants to promote an efficient use of resources and ensure that the Norwegian economy is flexible in the face of oil industry changes.

Leather travel case
This year's draft national budget proposal contains cuts but there are some bittersweet increases.Leather travel case
Photo: zibber/Shutterstock Images


Targeted tax reductions are in this year’s draft National Budget 2015 proposal. Infrastructure, productivity, and competitiveness are also priority areas.

The government forecasts a 2% growth in the Norwegian mainland economy (non-oil) both this year and next.

At the same time, it is expected that an anticipated petroleum investment decline will put downward pressure on growth in 2015. The oil industry has seen many redundancies in the past few months as energy giant Statoil wields the job-cutting axe.

“Lower demand from the petroleum sector poses a challenge to the mainland economy,” Finance Minister Jensen said. “We must ensure that our economy is able to adapt to changing circumstances. The government aims to foster productivity growth and implement measures to increase the economy’s growth potential.”

Regarding the Sovereign Wealth Fund 4% fiscal rule, she stated that government proposes this is 3% for 2015 – equivalent to a structural non-oil deficit of NOK 164bn (some USD 25.31bn/EUR 20bn/GBP 15.75bn at today’s ROE).

Less taxing          

Income and net wealth tax are also proposed reduced – though tax bases are to expand in order to fund this. Inheritance tax was abolished as of 1st January 2014.

According to the Minister of Finance, reducing taxes is to “make the tax system simpler and more conducive to growth. Lower tax on income strengthens incentives to work.”

“A reduction in the net wealth tax will stimulate saving and may encourage entrepreneurship,” she stated.

The government wants to ensure that investing in Norway is attractive, mentioning that the general framework for businesses should be designed to achieve this.

Moreover, tax levels need to be moderate, businesses need good access to qualified labour, and with infrastructure and public administration functioning well and efficiently, officials argue.

“The self-employed will benefit considerably from the tax changes. Total tax relief for individuals whose principal income derives from self-employment represents an average tax reduction of NOK 3,600. Business owners who are not self-employed will also benefit from significant wealth tax reductions,” says the government.

Main points of the tax levels in the 2015 Budget

Net wealth tax

  • Reduced to 0.75%.
  • Increase the basic allowance to NOK 1.2m.

Income tax

  • Employees’ social security contributions on wage income on social security benefits reduced to 8.1%.
  • Adjust personal allowance in line with wage increases.
  • Increase upper limit of the basic allowance for wage income/social security benefits by NOK 1k.
  • Raise basic allowance rate for pension income to 29%.
  • Abolish tax class 2 for married couples.
  • Maintain other rates, limits and allowances unchanged in nominal terms

VAT

  • Increase registration threshold for companies to NOK 150k (from NOK 50k).
  • Increase limit for low-value imports to NOK 500 (from NOK 200).

Food and drink

  • No change in VAT rates for sales values.
  • 2.1-2-2% increase on alcoholic drinks (dependent on alcohol % per litre and type).
  • Tax on non-alcoholic beverages up 2.1-1.2%.
  • Sugar tax (NOK per kg) increased 2%.
  • Tobacco products tax increased by 2.1%, cigarette paper 2.2%

Motor vehicle taxes

  • Vehicle registration tax up 2.1% (all weight classes, not on engine power under 71 kW).
  • NOx emissions (NOK per mg/km) up 2.1%.
  • CO2 emissions (NOK per g/km) up 2.1% (not the first 105 g/km).
  • Annual motor vehicle tax increased by 2.1-2.2% (dependent on fuel type, diesel particle filter).
  • Annual weight-based tax down 51.6%.
  • Vehicle re-registration tax reduced by 33.6%.
  • Introduce motor vehicle registration tax refund upon export of said vehicle.
  • Reduce annual weight-based tax on heavy vehicles

A complete list of changes, amounts, and percentages can be found here (external link).



Published on Wednesday, 8th October, 2014 at 14:14 under the news category, by Michael Sandelson   .
Last updated on 8th October 2014 at 14:34.

This post has the following tags: tax, income, vat, budget, spending, oil, norway.





  
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