The Left to Fight Tax Cuts and Rising Gaps

The opposition is preparing for the election campaign with strong attacks on growing inequality in Norway. Prime Minister Erna Solberg responds that Norway will not improve if everyone becomes poorer.

– Making the entire Norwegian society poorer reduces inequality. But it does not improve people’s daily lives. This is how Prime Minister Erna Solberg responds to the opposition’s criticism of growing inequality.

The government’s proposal to cut parts of the estate tax and other tax changes that give more to the highest paid, provokes opposition.

One by one, the Labor Party, the Socialist People’s Party, the Socialist People’s Party and the Rødt representatives shoot against the budget profile.

– This shows the long lines after Erna Solberg: almost doubling the number of disabled youth and almost doubling the number of billionaires, says Ap finance spokeswoman Hadia Tajik.

– Conservatives cannot find their own ways to measure differences. The objective, recognized and international indicators show that all the differences are increasing. The alarm bells should be ringing, says SV’s Kari Elisabeth Kaski.

Leader of Sps Trygve Slagsvold Vedum sier to Conservatives “continue to prioritize their rich uncles over ordinary working people.” According to Rødt’s leader, Bjørnar Moxnes, “now champagne corks are appearing in Holmenkollåsen.”

– They get tax cuts as ordered. This reinforces Forskjells-Norge, Moxnes says.

The opposition is deploying its cannons

The proposals in the budget are in addition to several years of cuts in income and wealth taxes under the Solberg administration. This year’s proposal provides:

• People with an income of 300,000 to 400,000 a cut of 300 crowns.
• People with an income of 500,000 to 600,000 get a cut of 500 crowns.
• People with incomes of 1 million or more will receive an average tax cut of NOK 3,400 in 2021.

In 2016, the Conservatives, the Labor Party, the Socialist People’s Party, the Christian Democrats and the Green Party agreed to a discount on the valuation of stocks and fixed assets.: The valuation of stocks and fixed assets was reduced from 100% to 80%. Since then, the discount has been increased to 35%.

In short, the scheme works like this: Your bank deposits are valued at 100 percent when you pay taxes. Every penny in the bank counts when the tax is applied.

If, on the other hand, you save on funds, stocks or own a company, you get a 35 percent discount. This means that only 65 out of 100 NOK is taken into account when the tax is applied. The government is now proposing to increase the discount to 45 percent.

Now the opposition is firing its guns for a blanket political settlement on the Norwegian Difference, to be fought until next year’s parliamentary elections.

Measuring “inequality” is a complicated professional exercise. There is no one definition accepted by all parties that gives a correct and complete answer.

But the opposition has received a lot of ammunition in recent days with various investigative reports including those from Statistics Norway:

‘Income inequality in Norway is much higher than official income statistics show. The explanation is that the statistics only include income reported on personal tax returns, and that business owners have had incentives to earn smaller stock dividends after the dividend tax was introduced in 2006, “he recently wrote Statistics Norway.

The results also show that the richest 1 percent pay less tax for each crown earned than most people.

And the government itself commissioned a report from the Frisch Center showing that the business owner’s wealth tax does not have a negative effect on employment and investment. On the contrary.

Solberg: known reactions

Prime Minister Erna Solberg rejects the criticism:

– Outside of the Storting, there are many positive comments about the budget. Inside the Storting, it is the case that everyone wants to stand out before a year’s election campaign, and the comments follow familiar lines of reaction, she says.

– There is talk of “tax scandal”, bouncing champagne bottles and growing inequality in Norway. Do you agree?

– No. Those with the best reason to celebrate are the district’s small business workers who are struggling. Now they know they need to take less out of the business to pay the homeowners’ taxes. That means more money to invest in the equipment they need, Solberg responds.

She believes the opposition “focuses too much on snapshots as income differences” rather than seeing how health and education are sources of inequality and exclusion. She says the government’s commitment to education and getting students to complete upper secondary school is one of the most important things the government does to prevent exclusion and reduce inequality.

SV’s Kaski shakes his head at Solberg’s remarks:

– I was disappointed that the so-called party of knowledge, the Conservatives, chose to ignore the general message of the experts in research and economics: inequalities in Norway are increasing, and they are increasing more and more under the leadership of Erna Solberg.

– When will inequality be high enough for conservatives? Kaski asks.

– Bigger tax cuts than investing in wellness

– Solberg says that it is too limited to look at economic indicators?

– It doesn’t help that Erna Solberg says we achieve a more integrated society when all the objective research shows that the differences are increasing in Norway. And poverty is increasing. That is the decision of the Solberg government, says Kaski.

The government does not follow a policy of more community and fewer differences. We’re going in the opposite direction, he adds.

– Doesn’t education, health, etc. matter?

– Yes Yes. Well-being means a lot. And yet the differences increase. This means that the tax cuts are greater than the investment in welfare, he says.

Hadia Tajik (Labor Party) says the government “makes it cheaper to be a billionaire and more expensive to be a normal family.”

– At the same time that they give new and large tax cuts to those who have the most from before, ordinary families incur greater expenses. It becomes more expensive to travel to work. It becomes more expensive to have children in kindergarten. And it becomes more expensive to get sick.

Tajik outlines three steps the Labor Party will take to counter inequality if the party wins power from the government:

• Prioritize getting more people into work
• Universal wellness instead of need-proof wellness
• Plus taxes and redistributive fees

– What will the Labor Party do with the income tax to reduce inequality?

– In our alternative state budget last year, we raised taxes for those who have more than 750,000 crowns in income, while those who win from this would get tax cuts, he responds.

The Labor Party recently submitted its proposal for party policy starting with the 2021 elections, but without clarifying a specific level of taxes and fees.