Flying in the face of Norway’s reputation as expensive and highly-taxed, Norwegian taxes decreased more than in any other country last year. Taxes also continue to bear favourable comparison with other countries.
A newly released report from the OECD shows a tax revenue-to-GDP ratio decrease of 1.4 percent for 2014, taking the Norwegian figure down to 39.1 percent. This continues to decrease the gap to the average for OECD countries, which has increased by two percentage points to 34.4 percent. The Norwegian tax ratio is therefore now 4.7 percent higher than the average, compared to 6.3 percent in 2013 and 9.1 percent in 2010.
The Norwegian figure also leaves its Scandinavian neighbours trailing in its wake, with Sweden’s tax revenue forming 42.7 percent of GDP and Denmark coming in at an astonishing 50.9 percent.
With a percentage point increase of over four percent since 2007, Denmark is also near the top of the table for overall tax burden increase since the beginning of the global financial crisis. Norway is one of only three countries – the other two are Spain and Israel – to have seen a decrease of three percent or more during this period.
The OECD report shows an increase in overall tax burden across OECD countries of 0.2 percent, continuing the trend of year-on-year increase since 2009. However, the percentage of the latest increase is primarily due to the increased taxation of personal income, personal profit and consumption, with taxes on corporations decreasing overall.
Between 2007 and 2014, average revenues in OECD countries from corporate incomes and gains fell from 3.6 to 2.8 percent of GDP, while revenues from individual income tax grew from 8.8 to 8.9 percent. Revenues from value added tax (VAT) grew from 6.5 to 6.8 percent in the same period.
“Corporate taxpayers continue finding ways to pay less, while individuals end up footing the bill,” OECD Centre for Tax Policy and Administration director Pascal Saint-Amans said as the organisation published its report.
The percentage of Norway’s tax revenue from personal incomes and capital gains in 2014 stood at 24 percent, close to the OECD average of 25 percent. Corporate taxes, at 22 percent of overall Norwegian tax revenue, were significantly higher than the OECD value of eight percent.
VAT rates are identical in all three Nordic countries at 25 percent, just behind the most expensive VAT country, Hungary, which has a 27 percent rate.