The «Monaco of Norway» will stop – E24

– We cannot risk a race to the bottom that contributes less income to the municipal coffers. It will affect schools, health and care services in municipalities, MDG leader Une Bastholm tells E24.

– The regulation must be changed, he says.

– How is that going to change concretely?

– We ask the government to return to the Storting with a proposal that allows the Storting to set an exact rate for wealth tax instead of setting maximum rates, responds the MDG summit.

The Green Party’s proposal will both stop “Monaco of Norway” and prevent other municipalities from making similar tax cuts.

Will make fiscal control of Bø impossible

The wealth tax in Norway is divided into two parts. The state’s share currently stands at 0.15 percent, while a higher proportion than 0.7 percent goes to municipalities.

ODM proposes that the municipal rate remain at 0.7 percent, but with an important difference: the municipalities are deprived of the current opportunity to lower the rate.

For decades, no municipality has seized this opportunity. It therefore creates an uproar that the municipality of Bø from 2021 reduces its wealth tax from 0.7 to 0.2 percent.

Controversial fiscal control has caused many millionaires to flee “Norway’s response to Monaco.” Among them is ski legend Bjørn Dæhlie, who according to E24 estimates will save around two million a year.

More entrepreneurs now also cross the municipal border to start businesses.

– Force others to follow

But Bastholm is concerned about what the tax measure could lead to.

– We hope to get a majority to change the rules so that “tax havens” like the municipality of Bø become an impossibility in the future, says the MDG leader.

– It has long been possible to set the tax at the local level, but no municipality, regardless of the color of the political majority, has set a rate different from the maximum rate of 40 years. Needless to say, this is money that municipalities completely depend on, Bastholm says.

She explains how Bø’s fiscal control can trigger what she calls a “race to the bottom”:

– When the neighboring municipality becomes a tax haven and reduces taxes, others are forced to do the same to avoid tax leakage. The result is greater inequality and less money for welfare. The weakest are the hardest hit, while the richest get even richer.

FRP wants the race, fears the MDGs

FRP, on the other hand, would like to see the tax cut run on MDG fears. Recently, E24 discussed the party’s proposal to unleash more “tax competition” between Norwegian municipalities: that the state’s tax share be eliminated and that the municipalities thus administer all the wealth tax themselves.

– We shouldn’t worry so much about companies and wealthy people moving from big cities to district municipalities like Bø. This gives districts enormous opportunities, says Helge André Njåstad, FRP’s municipal policy spokesperson.

Aps deputy leader Hadia Tajik has strongly opposed the FRP proposal, which she believes is “desperate”. The MDGs also warn of consequences.

– It may be good for municipalities to compete to facilitate local business, emphasizes Bastholm.

– But competing for the way the rich should be run does not create value or new jobs. It will only be a competition where municipalities will have to cut more and more in their schools, health and care so as not to lose income.