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What does Norway’s proposed 2021 budget mean for foreign residents?

What does Norway’s proposed 2021 budget mean for foreign residents?
Photo: Eirik Skarstein on Unsplash
Norway's government proposed its 2021 budget on Wednesday. We've taken a look at some key points and what they could mean for foreign residents.

The government expects Norway’s economy to begin to recover after the damage caused by the coronavirus, with employment increasing next year, NRK reports after the proposed 2021 budget was announced on Wednesday.

A considerable amount of the country’s sovereign wealth fund, in which the country’s oil revenues are invested, was spent mitigating the economic impact of Covid-19. That spending will decrease next year.

The impact of the virus on the economy was at the forefront as finance minister Jan Tore Sanner presented the proposed budget on Wednesday, while there were a number of other features which could affect everyday costs.

We've taken a look at some key points from the proposal and what they could mean for the general public, including foreign nationals who live in the Norway. More detail can be found at the bottom of this article.

READ ALSO: Norway oil fund loses 18 billion euros in first half of 2020

As much as 313.4 billion kroner from the oil fund will be used, a reduction of 90.9 billion kroner compared to 2020, NRK writes. The reduction or expiry of a number of coronavirus measures will be the primary reason for this.

Both amounts are significantly larger than spending from the fund in previous years.

Unemployment is forecast to fall from 4.9 percent this year to 3.1 percent next year, according to Statistics Norway.

“The coronavirus pandemic has resulted in the biggest setback to the Norwegian economy in the post-war era. Recent months have seen activity increase again, but great uncertainty remains about the situation moving forward,” the Ministry of Finance writes.

The government has pledged to reduce taxes for all income groups. Higher income groups will receive the biggest cuts, news wire NTB has reported.

Reductions will amount to between 200 and 800 kroner for incomes up to 1 million kroner in income; people with an income of 300,000-400,000 kroner get a cut of 300 kroner, while people with an income of 500,000-600,000 get a cut of 500 kroner.

Those with incomes of 1 million kroner and over will receive an average tax cut in 2021 of 3,400, kroner according to the budget proposal.

The government is also planning to reduce the wealth tax, estimated to cost the state 1.1 billion kroner next year.

Other notable elements of the proposed budget include a cut to renewable energy investment, from 867 million kroner to 439 million kroner; a 10.6 billion kroner provision for Covid-19 response including 3.8 billion kroner for buying vaccines; and a 5.7 percent increase in military spending, to 64.5 billion kroner.

Alcohol

Already expensive enough, alcohol taxes are to increase by 3.4 percent.

READ ALSO: Eight expensive things in Norway you'll hate paying for (apart from the alcohol)

Fuel

Unsurprisingly given the long-term goal of promoting electric vehicles, fuel is going to increase in price, as are fuel taxes.

  • Road tax (Veibruksavgiften) will increased by 2 percent to 5.01 kroner per litre of petrol.
  • For diesel, the tax is reduced by 1.1 per cent to 3.58 kroner per litre.
  • The CO₂ tax on petrol will increase by a hefty 8.7 percent, to 1.37 kroner per litre.

Transport

Given that the sector has been one of the hardest hit by the coronavirus crisis, air travel in 2021 is difficult to predict.

Nevertheless, the budget proposes an increase on passenger tax by 3.3 percent flights in Europe, which means that airlines will have to pay an extra charge of 79 kroner per passenger.

The increase is a little steeper for flights outside of Europe, at 3.4 percent or 211 kroner per passenger.

Electricity

Tax on electricity is set for  a 3.5 percent increase 16.69 øre per kilowatt hour.

Healthcare

Although Norway’s healthcare system is public, a user fee applies depending on the service you use. The budget proposal outlines an increase in the maximum user fee from 2,460 kroner to 3,183 kroner as of January 1st.

Language

The government is proposing a 25 million kroner investment on language training in 2021, under its integration spending. Here, five million kroner will be used to support Norwegian teaching under the auspices of voluntary organisations, with 20 million kroner allocated on a case-by-case basis for specified target groups.

Children

The child benefit (barnetrygden), a standard social welfare benefit given to families with children, will increase by 300 kroner for children up to the age of six years, according to the government’s proposal. The increase, equivalent to 3,600 kroner annually, will come into effect in September next year.

Cheaper sugar-free sparkling drinks

The government is proposing a reduction in the price of drinks like sparkling mineral water by 27.6 percent from July next year. The reduction will apply to drinks with low sugar content or artificial sweeteners. Drinks with high sugar content will retain current taxes which make Norway one of the most expensive countries to buy them.

READ ALSO: Norway's sugar consumption is rushing downwards 

It should be noted that the proposal is not the final version of the budget. The minority government must now negotiate with other parties in order to reach a version that will be passed by parliament.

Sources: Regjeringen, NRK


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