Norway targets power generators and fish farmers with resource tax

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Norway to impose $3 billion in tax hikes on electricity producers and fish farmers, with its centre-left government saying they should share more of the benefits they make from the commons with the rest of society .

The Scandinavian country is going introduce a resource tax on aquaculture and wind energy, increase the existing tax on hydroelectricity and impose an extraordinary tax on wind and hydroelectric energy in response to soaring electricity prices.

Norway is aiming to curb high inflation by cutting the amount it takes from its $1.2 billion oil fund and is instead seeking new taxes to balance increased spending on electricity subsidies for households and businesses due to the energy crisis in Europe.

Norway is one of the biggest economic beneficiaries of Russia’s full-scale war on Ukraine, as it has become the EU’s largest gas supplier and its energy companies earn record sums.

The Norwegian government is expected to earn NKr 1.5 billion ($137 billion) from oil revenues this year and NKr 1.9 billion next year, according to economists at Nordea bank.

The Norwegian government is under pressure to share these gains both internationally – as it seeks to avoid accusations of war profiteering – and domestically, as households and businesses are hit by rising oil prices. energy.

Norway’s approach of raising taxes on electricity generators and fish farmers contrasts with that of the new UK government, which has ruled out imposing windfall taxes on energy companies.

Norwegian Prime Minister Jonas Gahr Støre said that after years of growing inequality, “it is vital that those who have the most, and in many cases have earned much more in recent years, contribute more”.

He added: “An important part of this will be to ensure that the values ​​derived from our natural resources are more evenly distributed than they are today.”

Fish farm stocks fell on Wednesday after the announcement. SalMar, Grieg Seafood, Lerøy Seafood and Norway Royal Salmon all fell more than 20% in midday trading.

Representatives of affected industries reacted furiously, warning that the government was threatening Norway’s future prosperity.

Geir Ove Ystmark, head of the Norwegian Seafood Federation, said: “What the government is actually proposing is to cut down one of the most important industries for the future of Norway.”

Knut Kroepelien, head of pressure group Energy Norway, said: “The tax measures presented by the government could lead to a deeper and longer energy crisis.”

Trygve Slagsvold Vedum, finance minister, said the government had two ways to close the budget gap as it sought to reduce the use of oil fund money: deep cuts in social assistance or tax increases. “Spending cuts that provide funding of the magnitude needed now will not be compatible with the society we want Norway to be,” he added.

Tax increases are expected to rise by about NKr 33 billion, or one-third of the NKr 100 billion the government expects to cost rise in 2023 due to increased social benefits, integration of Ukrainian refugees, construction projects and electricity subsidies.

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