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Norway Unveils 'Neutral' 2013 Budget

by Ulrika Lomas,, Brussels

11 October 2012

Norway has unveiled its 2013 budget ahead of next year’s elections, which includes less fiscal stimulus than previously expected.

As part of its 2013 budget, Norway is set to double its carbon taxes on oil firms in order to help finance NOK2.3bn in additional aid to protect tropical forests in developing nations. Another similar tax hike on the fishing industry’s carbon emissions is also proposed.

Among other key tax measures, there will be a substantial increase in the tax-free threshold applicable to the wealth tax, and an increase in the basic tax-free allowance for wage taxation purposes.

Some economists had anticipated more fiscal stimulus before the 2013 elections, as polls show the ruling Labour Party trailing the conservatives. However, the government is also seeking to avoid an overheating of the Norwegian economy, which grew by 5% during the second quarter alone, despite the recession in Europe. The government expects GDP growth of 3.7% GDP in 2012 and 2.7% in 2013.

“Measured by its overall impact on GDP, the 2013 budget implies an approximately neutral fiscal stance”, said the Finance Ministry in a statement.

The structural budget deficit, i.e. before oil revenues are taken into account, is expected to reach NOK125.3bn (USD22bn), up from NOK116.2bn this year. This is equivalent to 5.3% of gross domestic product (GDP). However, Norway will run a NOK380bn surplus next year once oil revenues are counted.

TAGS: Wealth | Finance | tax | fiscal policy | law | gross domestic product (GDP) | budget | Norway | unemployment | carbon tax | individual income tax

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