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IMF Urges Norway To Reduce Real Estate Tax Perks

by Ulrika Lomas, Tax-News.com, Brussels

11 September 2015


Norway should reduce tax benefits for the housing sector and instead use the tax system to incentivize productive investment, the International Monetary Fund (IMF) said in a recent report.

This would help redeploy new investment toward tradable industries that will need to replace oil- and gas-related industries as an engine of growth, the Fund said in its 2015 Article IV consultation report with Norway.

The report noted that the 2015 Budget included a reduction in wealth tax breaks for commercial properties and second dwellings. It also welcomed the recent recommendations of a Tax Commission to shift the tax burden toward indirect taxes and further reduce preferential tax treatment for residential real estate relative to other assets.

The IMF's Executive Director for Norway, Audun Groenn, said in a statement that "a continued low oil price will over time have a significant impact on Norway's national wealth and the room for maneuver in fiscal policy." However, he said that fiscal policy cannot be the main tool to deal with a decline in demand from the Norwegian petroleum sector.

Groenn also said that the Government is focused on lowering taxes that hamper productivity and economic growth. He said that the Tax Commission recommended a significant reduction in the corporate tax rate. The authorities will summarize their plans for future tax reform in a white paper to the Parliament this fall and will continue to reduce taxes in the coming years, he said.

However, the Executive Director said that a significant reduction in tax incentives for home ownership is not on the Government's agenda.

TAGS: tax | investment | economics | property tax | tax incentives | fiscal policy | budget | International Monetary Fund (IMF) | corporation tax | Norway | tax breaks | tax reform | Tax

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