National Budget 2010

National Budget 2010

These pages contain information in English about Norway's National Budget for 2010, presented to the Storting as Report no. 1 (2009-2010) on 13 October 2009. The National Budget presents the Government's programme for the implementation of economic policy and projections for the Norwegian Economy.

Royal Norwegian Ministry of Finance

Kristin Halvorsen
Minister of Finance
October 2009

Measures to counter the effects of the financial crisis are working – 2010 budget to support the positive economic development

The National Budget 2010 - A summary

Main features of the Government’s tax programme for 2010

Main features of the Government’s tax programme for 2010

1 Main features of the Government’s tax programme for 2010

 

1.1 Main features of the Government’s tax programme

The Government’s objectives for its tax and fiscal policy are to ensure revenue for common endeavours, contribute to a fair income distribution and a better environment, promote employment throughout the entire country and improve the functioning of the economy.

By bringing the total tax revenues back up to the 2004 level, the Government has created opportunities to improve welfare programmes and build up public benefits. The Government has also enhanced the redistributive aspect of the tax system. Tax on net wealth and inheritance tax have been reduced for most people, but raised for people with large income from shares and with high net wealth. Problems linked to loopholes and tax favouritism of equities and business properties have been sharply reduced. The 2006 tax reform, which entailed a reduction in the difference in tax rates on earned income and on capital income, has made it harder for people to avoid paying taxes by converting earned income into capital income. Increasing the minimum deduction has provided tax relief for people in the lower and middle income brackets.

The Government has strengthened environmental taxes as instruments in environmental policy. Altogether in the period, environmental- and energy-related taxes have increased by almost NOK 1.5 billion. The CO2 tax on domestic aviation has been raised, and NOx tax has been introduced. The latter has largely been replaced by an agreement. In addition, the basic tax on heating oil, the petrol tax and the diesel tax have been raised. Much of emissions of greenhouse gases in Norway are covered by EUs Emissions Trading Scheme, and companies and consumers have to pay a price on their emissions. The Government has also adjusted its motor vehicle taxes to make them more environmentally effective. The registration tax now depends on the vehicle’s CO2 emissions, and the annual tax is differentiated according to environmental characteristics of the vehicle. These changes have resulted in large decrease in emissions of CO2 from new cars.

The Government has also done much to reduce overpriced fees so that they reflect the costs of providing the services. Altogether, the Government has reduced overpriced fees by more than NOK 550 million in the period. The beneficial redistributive and environmental aspects of the tax system are maintained and enhanced in the Government’s budget proposal for 2010. For example, the tax on net wealth is further improved, environmental taxes are strengthened, and important measures are implemented to combat tax evasion.

Enhancing the net wealth tax

Although the Government has done much to rectify uneven valuations etc. in the net wealth tax, the wide variation in tax-assessed values of homes as a share of fair market values (assessed value share) still gives rise to unacceptable differential treatment of home owners. The assessed value share can currently vary from 0 to over 30 per cent. It tends to be old dwellings in areas with rapidly rising house prices (towns and urban areas) that typically have the largest disparity between tax-assessed value and fair market value. However, there are also large variations within single towns. In Oslo, for example, the average tax-assessed value for home owners is slightly higher in Stovner than in Frogner, even though house prices are much higher in Frogner than in Stovner.

The Government proposes correcting this uneven valuation by introducing a new formula-based system for determining the tax-assessed value of homes. Holiday homes, farmhouses and properties abroad are not covered by this proposal. The new tax-assessed value will be determined by multiplying the floor space of the dwelling by a square metre price based on the geographical location (neighbourhood, municipality, sparsely populated vs. densely populated area), size, age and type (detached, semi-detached, terraced, flat) of the property. For primary homes (owner-occupied), the per square metre rate will be set at 25 per cent of the estimated sale price per square metre, whereas the rate for second homes, i.e. any other dwellings in addition to the primary home that are not defined as business or recreational properties, will be set at 40 per cent of the estimated sale price per square metre. The current “safety valve” system is being continued so that taxpayers can appeal and have the tax-assessed value reduced to 30 per cent of the documented fair market value (60 per cent for second homes). In addition, the tax-assessed values of recreational properties are increased by 10 per cent.

The Government proposes a major increase in the tax-free allowance in the net wealth tax, from NOK 470,000 to NOK 700,000 (NOK 1.4 million for married couples). In addition, the primary home will no longer be included when calculating a possible wealth supplement in the special tax limitation rule for low-income pensioners and single parents (receiving transitional benefit). Altogether, the changes in tax on net wealth entail a net tax relief of NOK 760 million.

The proposed new method will render the valuation system both more correct and fairer. Valuation of different types of homes will more accurately reflect actual wealth and will help ensure a fairer distribution between different income groups and between different regions and neighbourhoods. The large increase in the tax-free allowance ensures that people in all income brackets except those with the highest income, will pay less tax overall, with the greatest tax relief for low-income groups. Approx. 120,000 fewer people will be subject to tax on net wealth.

Some 760,000 people will pay less tax as a result of the proposal, and around 130,000 people will have to pay more tax. However, the increase in tax will be less than NOK 500 for a third of these. The higher the tax increase, the higher the taxpayer’s average income. The average gross income in the group of taxpayers who will have a tax increase of more than NOK 15,000 is more than NOK 3 million, whereas average pre-tax income is approx. NOK 300,000 for the people who will receive a tax cut of more than NOK 6,000.

In the new system for determining assessed values of residential properties, the square metre rates will be updated each year, based on developments in house prices. This means that tax on net wealth will increase in periods of economic growth combined with rising house prices and decrease in periods of recession with falling house prices. This will improve the net wealth tax` ability to automatically stabilise the Norwegian economy and counteract fluctuations.

The assessed value shares of commercial property have also varied greatly, resulting in differential treatment. To rectify this, the 2009 budget introduced a new method of assessing the value of commercial properties that are let. The new method ensures there is a clear correlation between the tax-assessed value and the rental value of the property.

At the same time, the Government indicated that it would submit a proposal in the 2010 budget for a new formula-based system for determining the tax-assessed value of commercial properties that are not rented out, based on the same principles as for let property. The goal is to ensure equal treatment of commercial properties regardless of whether they are let or not. Using the data companies report on rental income from let commercial properties as a basis, rates will be calculated for rental income per square metre for not-let commercial properties. The per-square metre rates are differentiated geographically and by type of commercial building to the extent that the reported data on rental income provide good statistical grounds for this. The new tax-assessed value will constitute 40 per cent of the property’s estimated sale price. The “safety valve” system for commercial properties is being continued so that taxpayers can appeal and have the tax-assessed value reduced to 60 per cent of the documented fair market value.

Table 1.1 indicates the average change in taxes as a result of the proposed tax system for 2010, broken down according to gross income. The calculations were performed using Statistics Norway’s tax model, LOTTE. The table shows that on average, the new system will entail tax cuts for all income groups, except for people with income over NOK 3 million. Since no other major changes are being proposed in the system for personal taxation, tax on net wealth will be responsible for most of the total changes in tax.

Table 1.1 Average change in tax in different gross income brackets.1 The tax system for 2010 compared with 2009 rules, adjusted for wage growth (the benchmark system). All persons aged 17 and older. NOK

Gross income.

NOK 1000

No. of people

Average tax in the benchmark
system for 2010

Average change
in tax under the proposal

Of which change
intax on net wealth2

Average tax under the proposal.
Per cent

0-150

618 200

5 800

-100

-100

7.3

150-200

373 600

16 900

-500

-200

9.4

200-250

362 800

31 500

-500

-200

13.8

250-300

350 400

49 700

-400

-200

17.9

300-350

363 600

67 700

-200

-200

20.7

350-400

366 400

84 700

-200

-200

22.6

400-450

322 200

101 300

-100

-200

23.8

450-500

254 500

119 700

-100

-200

25.2

500-600

307 800

148 600

-200

-200

27.3

600-750

210 000

198 800

-200

-300

29.9

750-1 000

131 600

280 000

-200

-300

32.8

1 000- 2000

88 900

467 000

-300

-300

36.4

2 000-3 000

9 400

914 700

-200

-300

38.4

Over 3 000

7 200

2 742 500

400

300

41.9

1) Does not include changes in indirect taxes. Rounded to the nearest NOK 100.
2) For married couples who have joint assets for tax purposes and who receive a double tax allowance, tax on net wealth is distributed according to the spouses’ percentage of the combined wealth.
Sources: Statistics Norway and the Ministry of Finance

 

Measures against tax evasion

The Government has made combating tax evasion a priority. Society is hereby deprived of considerable revenues. This undermines the solidarity which is the cornerstone in the funding of the public welfare system in Norway. Those who evade taxes increase the burden on loyal, law-abiding taxpayers. Measures to combat tax evasion are therefore also an important step in the work to ensure fairer income distribution.

To combat tax evasion, the Government has increased the budgets for the tax administration and the customs and excise administration in the past four years. At the same time, Norway has also played an active part in international work to combat tax havens. In the budget for 2010, the Government is following up several of the proposals from a Committee appointed by the Government to consider measures against tax evasion. It has not been possible to assess all the proposals put forward by the Committee, as the Committee presented its recommendations for comment relatively recently. However, proposals suggested by the Committee that have not been put forward in the 2010 budget will be considered later.

In the 2010 budget, the Government is recommending measures against the use of cash as a means of payment. Black market transactions are largely undertaken using cash, and it would therefore be better if a larger share of the payment flows took place through banks and other financial institutions, ensuring that the transactions would be traceable and thus harder to conceal. To this end, measures are being proposed aimed at both businesses and the private market as well as measures targeting breaches of the obligation to declare foreign currency and other means of payment.

The financial crisis and continued pressure from Norway and other countries has resulted in most of the world’s so-called tax havens now having changed their policies. Many of them are now ready to allow disclosure to our tax authorities. During this Parliament session the Government expects that Norway will be able to put in place tax information exchange agreements with a number of countries that till now have been closed to such disclosure. This will include the most important countries where Norwegian taxpayers have been able to conceal money to evade tax. Norway will continue its active participation in international efforts to eliminate these opportunities for concealment and tax evasion.

Tax changes that strengthen environmental policy

The work to change motor vehicle taxes to make them more environmentally effective will be continued in 2010. CO2 emissions from new cars have been reduced from 177 g per km in 2006 to 152 g per km in the period January to August 2009. The Government’s target is that average CO2 emissions from new cars shall be 120 g per km in 2012. To boost the reduction in CO2 emissions from new vehicles, it is proposed that the tax rates for the CO2 emissions of vehicles are raised again on 1 January 2010. This increase will be counterbalanced by lower tax rates for the motor power element of the registration tax. In addition, taxis will no longer get a 60 per cent discount on the initial charge for the vehicle’s CO2 emissions.

To prevent gas from outcompeting more environmental friendly alternatives, a carbon tax is introduced on domestic use of gas for heating of buildings from 1 April 2010. At the same time, an energy tax on gas is being introduced where the rates are differentiated in accordance with the minimum rates in the EU. The biofuel sale obligation has helped ensure that biodiesel is mixed into ordinary diesel to meet the requirements of 2.5 per cent biofuel in 2009. The state’s revenues from diesel tax have been reduced correspondingly. The exemption from diesel tax for the proportion of biodiesel will be cut in half in 2010 with a view to a final phase-out of the exemption in 2011. As from 1 July 2009 a prohibition against dumping of biodegradable waste in landfills has been introduced. The environmental costs of dumping waste will be lower than previously, and the rates for dumping waste will thus be reduced from 1 January 2010.

VAT on culture and sports

The Government is following up recommendations by a Committee appointed by the Government to assess the VAT treatment of cultural and sporting services. The Committee recommended to broaden the VAT base by introducing a 8 pct. VAT rate for cultural and sporting services. The Government will make some adjustments that limit the VAT broadening compared to the proposal from the Committee. Admission to theatres, opera, concerts etc. will be exempted from VAT, while the aim is to limit the VAT obligation for sports so that it covers health clubs and the most professional part of sports. The Government will introduce specific bills at a later date with a view to implementation from 1 July 2010.

Sector duties and fees

For 2010, it is proposed that sector duties and overpriced fees be reduced by a total of NOK 5 million. Among others, the coastal tax and the annual fee for port security will be discontinued.

Other tax reforms

The Government is proposing changes in a number of other taxes as well:

  • The system whereby employees can pay for their own PC via a tax-free deduction from their pre-tax pay is discontinued. No new such contracts between employees and employers may be entered into from 13 October 2009. No changes will be made to the tax exemption for private use of equipment funded by the employer.
  • The tax-free net income rate for married couples encompassed by the special tax limitation rule is being increased by more than the estimated growth in wages, to NOK 206,700 in 2010. This will ensure that married couples who receive only the minimum pension will not pay tax on their income. The tax-free net income rate for single people shall be adjusted in line with the expected increase in wages. This means that single people’s minimum pension will also remain tax-free.
  • The time limit for making additional advance tax payments is currently 30 April for employees and pensioners and 31 May for businesses. From 2010, the same date limit will be introduced for everyone: 31 May.
  • From 2010, shareholders in new housing companies will be taxed on the housing company’s income and wealth from takeover of the dwelling. Under the current system, shareholders are taxed once the housing company has completed at least half of the dwelling units on 1 January.
  • The border for prescribing property tax in sea areas shall be drawn at the coastal base line. Property tax prescribed for areas beyond this border shall be decreased gradually until it has been phased out by 2012.
  • From 2010, companies that hire out workers shall pay tax in the zone where most of the work is done, even if this is a different zone to the one the company is registered in.
  • An exception to the of employers’ social security contribution obligation is allowed on remuneration to employees on ships on the Norwegian continental shelf not covered by the National Insurance Act.
  • Tax on tobacco products is increased by 5 per cent from 1 January 2010.
  • The compensation system for tax on provisions for use on board fishing and hunting vessels in distant waters is changed to a direct exemption.

 

4.2 Increase in revenues as a result of the proposed tax reforms

The tax readjustment pledge was fulfilled with the presentation of the National Budget for 2007. In connection with subsequent budgets and the various measures introduced to mitigate the consequences of the financial crisis, tax relief corresponding to a total of NOK 239 million has been given compared with the 2007 budget. This means that there is room for new tax increases corresponding to a total of NOK 239 million in the 2010 budget (see table 1.2).

Table 1.2 Comparison of the Government’s tax pledge and the tax programme for 2010. Negative figures indicate tax relief. NOK millions

Accrued

Status of the tax pledge prior to the 2010 budget

Change in the level of the 2009 National Budget compared with the 2007 National Budget

1

Tax relief in the fiscal stimulus package, cf. Proposition no. 37 (2008–2009) to the Storting

-180

Tax relief in the 2009 Revised National Budget with revenue effects in 2009 and 2010

-60

Carryover from the tax pledge (opportunity for tax rises in the 2010 budget within the constraints of the tax pledge)

-239

New changes in taxes in the 2010 budget

Tax reforms that will yield revenue in 2010 (cf. table 1.3)

-77

Tax reforms that will yield revenue in 2009, 2011 and 2012

30

Total new tax rises in the 2010 budget

-47

Deviation from the tax pledge as a result of the Government’s tax programme for 2010

-281

Source: Ministry of Finance.

 

Table 1.3 shows the calculated revenue effects of the Government’s proposed tax reforms for 2010.

The revenue effects have been calculated relative to a benchmark system for 2010. The benchmark system for direct taxes is based on the 2009 rules, but where all thresholds in the general rates structure have been adjusted to the 2010 level with an estimated wage growth from 2009 to 2010 of 3.5 per cent. This means that a taxpayer who is not entitled to any special deductions etc. and who has an annual wage growth of 3.5 per cent will have the same average tax in the benchmark system for 2010 as in 2009. Special deductions and other thresholds in personal taxation have been adjusted with an estimated inflation rate from 2009 to 2010 of 1.8 per cent. In the benchmark system for indirect taxes, all unit taxes have been adjusted for the estimated rate of inflation from 2009 to 2010 of 1.8 per cent. The tax burden in the benchmark system will thus be unchanged from 2009 to 2010.

Table 1.3 Estimated revenue effects of the Government’s tax programme for 2010. Negative figures indicate tax relief. The figures have been calculated relative to a benchmark system for 2010. NOK millions

Accrued

Booked

The income tax base for individuals

542

448

Discontinue the pre-tax deduction system for home PC1

150

150

Increase the tax-free net income in the tax limitation rule for low income pensioners

-100

-80

Introduce tax at source on pensions etc.

230

185

Nominal continuation, interplay effects and rounding off

262

193

Tax on net wealth package

-760

-385

Introduce new, more accurate systems for determining the tax-assessed value of homes and of commercial properties that are not let. Increase the tax-assessed value of recreational properties by 10 per cent. Increase the tax-free allowance to NOK 700,000

-450

-135

Remove primary residences from the wealth supplement in the tax limitation rule

-310

-250

Business taxation

0

-20

Discontinue the employers’ social security contribution on the Norwegian continental shelf2

0

-20

Environmental, energy and vehicle taxes

155

140

Introduce CO2 and energy taxes on natural gas and on LPG3

40

35

Reduce the tax rate for landfill waste

-130

-120

Strengthen the CO2 component in the vehicle registration tax

0

0

Remove the low rate for the CO2 component in the registration tax for taxis

50

45

Phase out exemption from diesel tax for biodiesel

195

180

Other changes

-9

53

Coordinate the date limits for making additional advance tax payments to 31 May

-6

-6

Extend the VAT obligation to cultural and sport services from 1 July 2010

-250

-168

Replace the compensation scheme for tax on provisions for fishing and hunting in distant waters by a tax exemption

-3

-3

Increase tax on tobacco products by 5 per cent in addition to price adjustment

250

230

Sector duties and overpriced fees

-5

-5

Remove payment from TV2

-29

-29

Increase the sector duties of the Financial Supervisory Authority of Norway

41

41

Discontinue the annual fee for port security

-15

-15

Increase the control and supervision fee for aquaculture

10

10

Implement changes in the sector taxes to the Norwegian Gaming and Foundation Authority

0

0

Reduce coastal tax

-12

-12

TOTAL NEW CHANGES IN DIRECT AND INDIRECT TAXES IN 2010

-77

231

1) This reform only affects new agreements, meaning the system will gradually be phased out by 2012. Total savings will amount to NOK 450 million.
2) It is proposed that this change be introduced from 2009 and will therefore not have an accrued effect in 2010.
3) Compensation for affected industries via the Budget’s expenditures have been deducted.
Source: Ministry of Finance

 

Tables 1.4 and 1.5 provide an overview of important rates and thresholds in the Government’s proposed tax programme for 2010 with regard to direct and indirect taxes. The tables also show the tax rates for 2009 and the change from 2009 to 2010 as a percentage. Because the figures here are rounded, the proportional increase of the general allowances and thresholds from 2009 to 2010 may deviate from the estimated wage growth.

Table 1.4 Direct tax rates and thresholds for 2009 and proposals for 2010

2009
rules

Proposal
2010

Change
     2009–2010

Tax rate on ordinary income

                       

Personal taxpayers1

28 per cent

28 per cent

-

Companies

28 per cent

28 per cent

-

Surtax

Bracket 1

Threshold

NOK 441,000

NOK 456,400

3.5 per cent

Rate2

9.0 per cent

9.0 per cent

-

Bracket 2

Threshold

NOK 716,600

NOK 741,700

3.5 per cent

Rate

12.0 per cent

12.0 per cent

-

Social security contribution

Lower threshold for payment of employee’s social security contribution

NOK 39,600

NOK 39,600

-

Levelling rate

25.0 per cent

25.0 per cent

-

Rate

Wage income

7.8 per cent

7.8 per cent

-

Income from self-employment in primary sector

7.8 per cent

7.8 per cent

-

Other income from self-employment

11.0 per cent

11.0 per cent

-

Pension income, etc.

3.0 per cent

3.0 per cent

-

Employers’ social security contribution

Zone I

14.1 per cent

14.1 per cent

-

Zone Ia3

14.1 per cent

14.1 per cent

-

Zone II

10.6 per cent

10.6 per cent

-

Zone III

6.4 per cent

6.4 per cent

-

Zone IV

5.1 per cent

5.1 per cent

-

Zone IVa

7.9 per cent

7.9 per cent

-

Zone V

0.0 per cent

0.0 per cent

-

Maximum effective marginal tax rates

Wage income excl. employers’ social security contribution

47.8 per cent

47.8 per cent

-

Wage income incl. employers’ social security contribution

54.3 per cent

54.3 per cent

-

Pension income

43.0 per cent

43.0 per cent

-

Primary sector self-employment income

47.8 per cent

47.8 per cent

-

Other self-employment income

51.0 per cent

51.0 per cent

-

Dividends and withdrawals4

48.2 per cent

48.2 per cent

-

Personal allowance

Class 1

NOK 40,800

NOK 42,210

3.5 per cent

Class 25

NOK 81,600

NOK 84,420

3.5 per cent

Basic allowance in wage income

Rate

36.0 per cent

36.0 per cent

-

Lower limit

NOK 4,000

NOK 4,000

-

Upper limit6

NOK 70,350

NOK 72,800

3.5 per cent

Basic allowance in pension income

Rate

26.0 per cent

26.0 per cent

-

Lower limit

NOK 4,000

NOK 4,000

-

Upper limit

NOK 58,900

NOK 60,950

3.5 per cent

Special wage income allowance7

NOK 31,800

NOK 31,800

-

Special allowance for age, disability, etc.

NOK 19,368

NOK 19,368

-

Tax limitation rule for pensioners, etc8

Levelling rate

55.0 per cent

55.0 per cent

-

Tax-free net income

Single

NOK 109,850

NOK 113,700

3.5 per cent

Married couple

NOK 198,150

NOK 206,700

4.3 per cent

Net wealth supplement

Rate

1.5 per cent

1.5 per cent

-

Limit

NOK 200,000

NOK 200,000

-

Special allowance for taxpayers in Finnmark and Nord-Troms

Class 1

NOK 15,000

NOK 15,000

-

Class 2

NOK 30,000

NOK 30,000

-

Seamen’s allowance

Rate

30.0 per cent

30.0 per cent

-

Upper limit

NOK 80,000

NOK 80,000

-

Fishermen’s allowance

Rate

30.0 per cent

30.0 per cent

-

Upper limit

NOK 150,000

NOK 150,000

-

Special allowance for self-employed within agriculture etc.

Icome-independent allowance

NOK 54,200

NOK 54,200

-

Allowance rate above income-independent allowance

32.0 per cent

32.0 per cent

-

Maximum total allowance

NOK 142,000

NOK 142,000

-

Special allowance for high expenses linked to illness

Lower limit

NOK 9,180

NOK 9,180

-

Maximum annual allowance for payments to individual pension schemes

NOK 15,000

NOK 15,000

-

Allowance for travel between home and work

Rate per km

NOK 1.50

NOK 1.50

-

Lower limit for allowance

NOK 13,700

NOK 13,700

-

Maximum allowance for donations to voluntary organisations

NOK 12,000

NOK 12,000

-

Maximum allowance for paid union fees etc.

NOK 3,600

NOK 3,660

1.7 per cent

Home investment savings scheme for young people under 34 (BSU)

Tax deduction rate

20.0 per cent

20.0 per cent

-

Maximum annual savings

NOK 20,000

NOK 20,000

-

Maximum total savings in the scheme

NOK 150,000

NOK 150,000

-

Parental allowance for documented expenses for childminding and childcare

Upper limit

One child

NOK 25,000

NOK 25,000

-

Supplement per additional child

NOK 15,000

NOK 15,000

-

Tax on net wealth9

Municipal

Threshold

NOK 470,000

NOK 700,000

48.9 per cent

Rate

0.7 per cent

0.7 per cent

-

State

Threshold

NOK 470,000

NOK 700,000

48.9 per cent

Rate

0.4 per cent

0.4 per cent

-

Inheritance tax

Threshold

Level 1

NOK 470,000

NOK 470,000

-

Level 2

NOK 800,000

NOK 800,000

-

Rates

Children and parents

Level 1

6 per cent

6 per cent

-

Level 2

10 per cent

10 per cent

-

Other beneficiaries

-

Level 1

8 per cent

8 per cent

-

Level 2

15 per cent

15 per cent

-

Discount on shares10

    40 per cent

    40 per cent

-

Wage allowance under the risk free rate of return allowance for sole proprietorships

15.0 per cent

15.0 per cent

-

Depreciation rates

Asset group a (office equipment, etc.)

30 per cent

30 per cent

-

Asset group b (acquired goodwill)

20 per cent

20 per cent

-

Asset group c (lorries, buses, vans, etc.)

20 per cent

20 per cent

-

Asset group d (passenger cars, machinery and equipment, etc.)

20 per cent

20 per cent

-

Asset group e (ships, vessels, rigs, etc.)

14 per cent

14 per cent

-

Asset group f (aircraft, helicopters)

12 per cent

12 per cent

-

Asset group g (systems for transfer and distribution of electricity and electro technical equipment in power companies)

5 per cent

5 per cent

-

Asset group h (buildings and facilities, hotels, etc.)11

4 (8) per cent

4 (8) per cent

-

Asset group i (business buildings)

2 per cent

2 per cent

-

Asset group j (technical installations in business and other commercial buildings)

10 per cent

10 per cent

-

1) For taxpayers in Nord-Troms and Finnmark, the rate is 24.5 per cent.
2) For taxpayers in Nord-Troms and Finnmark, the rate is 7 per cent in bracket 1.
3) In zone Ia, employers’ social security contribution shall be paid at a rate of 10.6 per cent until the difference between what the enterprise actually pays and what the enterprise would have paid at a rate of 14.1 per cent equals the de minimis state aid threshold. In 2010, threshold is NOK 530,000 per enterprise. For road transport companies in zone Ia, the threshold is NOK 265,000.
4) Including 28 per cent corporation tax.
5) Taxpayers who support their spouse and single parents are taxed in class 2.
6) The sum of the basic allowance in wage income and the basic allowance in pension income is limited upwards to the maximum basic allowance in wage income, i.e. NOK 72,800 in this proposal.
7) Taxpayers who only have wage income shall have the highest of the basic allowance in wage income and the special wage income allowance.
8) The tax limitation rule also applies to single parents, but only those receiving transitional benefit.
9) The threshold values are for single taxpayers. For married couples who are assessed together with joint assets, the threshold values are double that shown in the table.
10) The discount applies to non-listed shares and shares in general partnerships and limited partnerships. The discount is limited to an inheritance tax basis for these kinds of shares of up to NOK 10 million per beneficiary.
11) Simply structured buildings with an expected commercial lifetime of less than 20 years can be depreciated at the rate of 8 per cent.
Source: Ministry of Finance

 

Table 1.5 Indirect tax rates for 2009 and proposed rates for 2010

Tax category

Current rate

Proposal 2010

Change as a percentage

Value-added tax, per cent of sale price1

General rate

25

25

-

Reduced rate

14

14

-

Low rate

8

8

-

Tax on alcoholic beverages

Spirits-based beverages containing over 0.7 per cent alcohol by volume, NOK per pct. alcohol and litre

6.07

6.18

1.8

Other alcoholic beverages containing from 4.7 to 22 per cent alcohol by volume, NOK per pct. alcohol and litre

3.96

4.03

1.8

Other alcoholic beverages containing from 0.7 to 4.7 per cent alcohol by volume, NOK per pct. alcohol and litre

a) 0.0-0.7 pct. alcohol by volume

0.00

0.00

-

b) 0.7–2.7 pct. alcohol by volume

2.71

2.76

1.8

c) 2.7–3.7 pct. alcohol by volume

10.23

10.41

1.8

d) 3.7–4.7 pct. alcohol by volume

17.72

18.04

1.8

Tax on tobacco products

Cigars, NOK per 100 gram

198

212

7.1

Cigarettes, NOK per 100 unit

198

212

7.1

Smoking tobacco, NOK per 100 gram

198

212

7.1

Snuff, NOK per 100 gram

77

82

6.5

Chewing tobacco, NOK per 100 gram

77

82

6.5

Cigarette rolling paper, NOK per 100 units

3.02

3.23

7.0

Motor vehicle registration tax

Passenger cars etc. Tax group a2

Weight, NOK per kg

first 1,150 kg

35.04

35.67

1.8

next 250 kg

76.37

77.74

1.8

next 100 kg

152.76

155.51

1.8

remainder

177.65

180.85

1.8

Engine power, NOK per kW

first 65 kW

127.44

55.10

-56.8

next 25 kW

531.00

481.00

-9.4

next 40 kW

1,274.39

1,297.33

1.8

remainder

2,654.98

2,702.77

1.8

CO2 emissions, NOK per g/km

first 120 g per km3

-500.00

-609.00

21.8

next 20 g per km

526.00

725.00

37.8

next 40 g per km

531.00

731.00

37.7

next 70 g per km

1,486.78

1,704.00

14.6

remainder

2,500.00

2,735.00

9.4

Vans class 2. Tax group b4

per cent of car tax

22

22

-

Camper vans. Tax group c5

per cent of car tax

22

22

-

Caterpillar vehicles. Tax group e

per cent of basis for value tax

36

36

-

Motorbikes. Tax group f

Tax per unit

10,101

10,283

1.8

Engine power, NOK per kW

first 11 kW

0

0

-

remainder

449.51

457.60

1.8

Displacement tax, NOK per cm3

first 125 cm3

0

0

-

next 775 cm3

34.69

35.31

1.8

remainder

76.08

77.45

1.8

Snowscooters. Tax group g

Weight, NOK per kg

first 100 kg

14.23

14.49

1.8

next 100 kg

28.48

28.99

1.8

Remainder

56.93

57.95

1.8

Engine power, NOK per kW

first 20 kW

37.97

38.65

1.8

next 20 kW

75.90

77.27

1.8

remainder

151.80

154.53

1.8

Displacement, NOK per cm3

first 200 cm3

2.98

3.03

1.7

next 200 cm3

5.93

6.04

1.9

remainder

11.86

12.07

1.8

Taxis. Tax group h6

per cent of car tax

40

40

-

Veteran cars. Tax group i

NOK

3,326

3,386

1.8

Minibuses. Tax group j7

‑per cent of car tax

40

40

-

Annual tax, NOK per year

Ordinary rate

Petrol vehicles and diesel vehicles with factory-fitted particle filter

2,740

2,790

1.8

Diesel cars without factory-fitted particle filter

3,185

3,245

1.9

Caravans

1,025

1,045

2.0

Motorbikes

1,675

1,705

1.8

Tractors, mopeds, etc.

390

395

1.3

Annual weight based tax, NOK per year

variable

variable

1.8

Re-registration tax

variable

variable

1.8

Petrol tax, NOK per litre

Sulphur-free8

4.46

4.54

1.8

Low-sulphur9

4.50

4.58

1.8

Auto diesel tax, NOK per litre

Sulphur-free10

3.50

3.56

1.7

Low-sulphur11

3.55

3.61

1.7

Marine engine tax, NOK per hp

147.81

150.50

1.8

Electricity consumption tax, NOK 0.01 per kWh

General rate

10.82

11.01

1.8

Reduced rate

0.45

0.45

-

Basic tax on heating oil, etc.

Mineral oil, NOK per litre

0.870

0.886

1.8

Mineral oil in the wood processing industry, production of colorants and pigments, NOK per litre

0.124

0.126

1.6

Lubricant oil tax, NOK per litre

1.77

1.80

1.7

Energy tax on gas

For heating

Natural gas, NOK per Sm3

-

0.05

-

LPG, NOK per kg

-

0.00

-

For other purposes

Natural gas, NOK per Sm3

-

0.10

-

LPG, NOK per kg

-

0.37

-

Carbon dioxide tax

Petroleum activities, NOK per litre or Sm3

0.46

0.47

2.2

Mineral oil, NOK per litre

0.57

0.58

1.8

Mineral oil for domestic aviation, NOK per litre

0.67

0.68

1.5

Mineral oil in the wood processing, herring meal and fish meal industry, NOK per litre

0.29

0.30

3.4

Petrol, NOK per litre

0.84

0.86

2.4

Natural gas, NOK per Sm3

0.49

0.51

4.1

LPG, NOK per kg

0.64

0.65

1.6

Sulphur tax, NOK per litre

0.074

0.075

1.4

Tax on NOx emissions, NOK per kg

15.85

16.14

1.8

Tax on the final disposal of waste

Landfills, NOK per tonne

447

275

-38.5

Landfills with exemption from the ban on dumping waste, NOK per tonne

447

455

1.8

Incineration plant, NOK per emissions unit

variable

variable

1.8

CO2 tax on incinerated waste, NOK per tonne

62.35

63.47

1.8

Tax on health and environmentally hazardous chemicals

Trichloroethane, NOK per kg

60.96

62.06

1.8

Tetrachloroethane, NOK per kg

60.96

62.06

1.8

Environmental tax on greenhouse gases HFC and PFC

NOK per tonne of carbon dioxide equivalents

204.99

208.68

1.8

Tax on chocolate etc., NOK per kg

17.29

17.60

1.8

Tax on non-alcoholic beverages

Finished products, NOK per litre

2.71

2.76

1.8

Concentrate (syrup), NOK per litre

16.53

16.83

1.8

Sugar tax, NOK per kg

6.70

6.82

1.8

Tax on beverage containers, NOK per unit

Basic tax, disposable packaging

1.00

1.02

2.0

Environmental tax

a) Glass and metal

4.88

4.97

1.8

b) Plastic

2.95

3.00

1.7

c) Cardboard and cartons

1.22

1.24

1.6

Stamp duty, per cent of sale price

2.5

2.5

-

1) The change in value-added tax is expressed in percentage points.
2) Group a: Cars, class 1 vans and buses shorter than 6 metres with up to 17 seats. Displacement is used as the tax component for vehicles whose carbon dioxide emissions are not stated.
3) For emissions under 120 g per km a deduction is given per gram under 120 g per km.
4) Group b: Class 2 vans. The change is expressed in percentage points.
5) Group c: Camper vans. The change is expressed in percentage points.
6) Group h: Taxis and transport for people with disabilities. 100 per cent for CO2 component. The change is expressed in percentage points.
7) Group j: Buses shorter than 6 metres with up to 17 seats, where at least 10 are forward-facing. The change is expressed in percentage points.
8) Petrol with a sulphur content of 10 ppm or lower.
9) Petrol with a sulphur content of between 10 ppm and 50 ppm.
10) Diesel with a sulphur content of 10 ppm or lower.
11) Diesel with a sulphur content of between 10 ppm and 50 ppm.
Source: Ministry of Finance

 

1.3 Allocation of tax revenues

Table 1.6 provides a general overview of the main groups of taxes and shows which parts of the public sector receive revenue from each main group. In total, tax revenues are estimated to amount to NOK 932 billion in 2009, of which approx. 85 per cent accrues to central government, just less than 13 per cent to local government and just less than 2 per cent to regional government.

Most of the local and county authorities’ tax revenues come from income tax and tax on net wealth from personal taxpayers. Approx. 33 per cent of the central government’s tax revenues come from VAT, excise duties and customs duties. Approx. 27 per cent comes from personal taxpayers, while approx. 22 per cent is income tax and tax on net wealth from non-personal taxpayers and employers’ social security contributions in mainland Norway. Approx. 15 per cent of the central government’s revenues in 2009 come from direct and indirect taxes in the petroleum sector. Other taxes constitute approx. 3 per cent.

Table 1.6 Accrued taxes distributed according to creditors. Estimate for 2009. NOK billions

Central government

Local government

Regional government

In total

Individual taxpayers

211.8

111.9

21.5

345.2

Tax on ordinary income

101.1

103.9

21.5

226.5

Surtax

18.6

-

-

18.6

Employee’s social security contributions

87.6

-

-

87.6

Tax on net wealth

4.5

8.0

-

12.5

Businesses (which pay their taxes in arrears)

45.0

1.3

0.2

46.6

Income tax (including power stations)

44.7

1.3

0.2

46.2

Tax on net wealth

0.3

-

-

0.3

Property tax

-

6.3

-

6.3

Employers’ social security contributions

127.6

-

-

127.6

Indirect taxes

263.5

-

-

263.5

VAT

176.5

-

-

176.5

Excise duties and customs duties

87.0

-

-

87.0

Petroleum

120.1

-

-

120.1

Tax on income

116.1

-

-

116.1

Extraction tax

4.0

-

-

4.0

Other direct and indirect taxes

22.3

0.7

-

23.0

Social security and pension premiums, other central government
and social security accounts

18.9

-

-

18.9

Tax on dividends to foreign shareholders

1.5

-

-

1.5

Other taxes

1.9

0.7

-

2.6

Total direct and indirect taxes

790.3

120.2

21.8

932.3

Of which direct taxes

526.8

120.2

21.8

668.8

Source: Ministry of Finance