Nowadays the economy of Norway is literally thriving and the country is regarded as one of the wealthiest countries in the world thanks to exports of natural resources. The main reason for this economic growth can be attributed to north sea oil and gas production.
The country is a leading producer of petroleum, hydropower, fish, forests, and minerals. But having rich natural resources is not the only reason for their success. In fact, the Nordic model of the economy is probably the major reason for economic growth.
The tax rates of the Scandinavian countries are lower than any other country’s rate in Europe. But it seems like current conditions are going to change as Norway’s Green party announced that they plan to increase taxes. The party plans to increase fees and taxes by 32.5 billion kroner which is far more than any other party in the Norwegian parliament.
However, the greens are not the only ones and the whole parliament decided together that the taxes have to be increased though no one knows why. On Monday the Socialist left party also announced that they want to increase taxes by 17 billion kroner and the Red Party plans to increase fees by NOK 29.7 billion.
Among these sprites, the most reasonable price is announced by the Labor party which is increasing only the wealth fee by NOK 7.2 billion but remains frozen, taxes at the existing level.
Consequences of increased taxes
Although these parties state that they have arguments for increasing tax rates, the result will probably impact badly on most of the sectors of Norway and the reason is clear – the government has a monopoly over so many sectors in the country. For example, the government has complete control over the gambling industry in Norway.
This fact also has many advantages because the market is strictly regulated and as a result, Norwegian players don’t have to worry about safety measures but now increased taxes may reduce the number of customers who take part in land-based casinos in Norway.
This is not something favorable for the country because the gambling sector makes a significant part of the economy. As a result, probably offline players may switch online and start using the services of Norwegian live casinos.
But increased taxes will probably pose threats to both online and offline casinos and the gambling industry is just one example of the sectors impacted by increased fees.
So, if the parliament really wants to increase some taxes they must find more reasonable explanations because just saying that their reason is different from other parties and they plan to increase not everything but just the environmental taxes is not enough for justification.
This is exactly what the Green Party representative said for stating their reasons. MDG plans to increase taxes by NOK 10.5 billion and also, they want to increase fees by NOK 22 billion.
MDG wants to increase taxes by NOK 10.5 billion and fees by NOK 22 billion and as Une Aina Bastholm, the spokesperson of Norway’s Green Party says MDG always differs from other parties when it comes to taxes and fees.
But probably the citizens of Norway who are going to be obliged to pay these increased fees won’t care whether their reasons are different or not. If parliament wants to increase the taxes, they also have to privatize some national sectors, like gambling, then. But for now, nothing like this is going to happen shortly.
Advantages of the Nordic Model of taxation
Norway is among those Scandinavian countries which are widely known for the effective Nordic Model of the economy. The model accepts both the approaches of the welfare state and globalization that are opposite to each other.
What makes this model truly special is the public provision of social services that are funded by taxes. The nordic model is a mix of socialist and capitalist models which is one of the reasons for its success.
Usually, most of the revenue of Scandinavian countries such as Denmark, Norway, Sweden, or Finland comes from their residents through the income tax. But also, the revenue is raised from social security contributions, the value-added tax, and corporate income taxes. These countries are widely known for the fact that their corporate income taxes are lower than those in the United States.
The integral part of this model is universal healthcare and an effective education system. But the downside is that all these things require higher levels of taxation and as a result, Scandinavians have relatively high tax ratios compared to their GDP. But this kind of taxation structure in the Nordic countries is not a surprise because that’s the only way to raise a significant amount of revenue.
Therefore higher taxes on middle-income taxpayers, as well, as on value-added taxes are considered normal. However, they usually don’t place more than average taxes on capital income and rely on labor and consumption.
This is why the Norwegian Green Party (MDG) believes that increasing prices may have certain advantages for the economy of Norway. Today the party is considered as one of the most progressive parties which is why they are supported by almost 16% of the population in Oslo. Indeed, the increase in taxation was a significant reason for their winning in the elections in 2017.
They pledged to increase the taxes and the citizens liked the idea because it’s a way to maintain egalitarianism in the country. Back in this time the government was accused of spending way too much and greens thought that tax hikes were a way to provide balance.
The greens believe that rising fees is vital today as well mainly because of the pandemic-related crisis. As they say, it’s the only way to maintain the Nordic model and invest in healthcare or education. But the pandemic badly affected the revenue of Norwegians as well and therefore it shouldn’t happen at their expense.