Revised Norwegian Budget Sees More Tax Reductions

by Ulrika Lomas, Brussels, Tax-News.com

13 November 2001

Norway's new centre-right government has amended the previous Labour government's Budget for 2002 to include more tax reductions in a bid to help increase the 'growth potential' of the economy.

In a budget statement, the main features of the Fiscal Budget proposal for 2002 include a reduction in real terms of direct and indirect paid taxes of approximately NOK 7.2 billion from 2001 to 2002. Thus, states the government, the tax reduction is NOK 3.4 billion higher than the original proposal put forward by the Labour government. In accrued terms, direct and indirect taxes are reduced by NOK 11.8 billion, i.e. NOK 4.2 billion more than the previous government's proposal.

The government stresses that it wants to facilitate a gradual reduction of the tax level over the four-year parliamentary term and aims to create a more stable framework for the business sector with a more predictable tax policy.

The previous government imposed a tax on dividends received by shareholders last year as a temporary measure but aimed to extend the tax in the budget. However, the new government has proposed to abolish the tax since it represents a certain degree of "double taxation" of dividends and discriminates against share capital financing.

The marginal tax rate for large groups is lowered and the standard deduction in wage and pension income is increased with the aim of raising the supply of labour. Property taxes and duties on alcohol are also lowered and passenger tax on air travel is abolished.

In order to get the budget approved by parliament, the government will need support from the right-wing Progress Party and budget negotiations between the two are due to conclude before 20 November.

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