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KEY POINTS: What you need to know about Norway’s 2023 budget and how it could affect you

The Norwegian government agreed on the state budget for 2023 with the Socialist Left party on Tuesday. Here are the proposals which could affect you.

Ferry in Norway
If the budget proposal is adopted, ferry fares will be halved compared with January 2021 rates. Photo by Oskars Sylwan / Unsplash

On Tuesday evening, the coalition government and the Socialist Left Party agreed on a budget for 2023 after weeks of talks and negotiations. At a press conference, the three parties said that the budget would put money in the hands of the most disadvantaged. 

“This budget will help us get through the challenging times we are in together,” PM Jonas Gahr Støre said to the media. 

Reduced income tax and higher tax deductions for trade union fees

The government will reduced income tax for people with income below 750,000 kroner. If the proposal is adopted, a family with two incomes of 550,000 kroner will pay about 7,800 kroner less tax in 2023, compared with the 2021 rules.

Finance Minister, Trygve Slagsvold Vedum, has said that the tax cuts would mean that 76 percent would pay less or the same amount of tax as they currently do. 

Support measures for single parents and young people

The budget proposal includes an annual income increase of up to 11,500 kroner for single parents with low income. Following negotiations, increased child allowance has also been announced. 

In 2023, the increase would amount to 9,600 kroner, as the restructuring of the support measure would take place from March 1st.

At the same time, the government will introduce a “young persons’ guarantee” for unemployed people under 30 years of age, and a qualification and employment package, with the goal of getting more people into the job market.

The budget proposal also envisions an additional price adjustment of the study grant, paying out 1,500 kroner more in the grant for the 2023-24 school year, as well as increased cancellations of student loans from the Norwegian State Educational Loan Fund for people living and working in the Finnmark and Nord-Troms area.

Following negotiations, increased child allowance has also been announced. 

Cheaper ferries, reduced road usage tax on fuel

Always a hot debate issue in Norway, ferry fares are to be halved – compared with rates as of January 1st, 2021, and free ferry travel will be offered to Norwegian island communities without road connections.

Fuel tax will also be lowered to the tune of 1.5 billion kroner. 

Increased tolls, VAT on “expensive” electric cars

As has previously announced, the government plans to introduce VAT on the more expensive electric cars.

As a result, consumers in Norway might have to pay VAT on electric cars that cost more than 500,000 kroner from January 1, 2023.

Furthermore, as the proportion of electric cars on Norwegian roads is increasing rapidly, the budget also recommends an increase in tolls for electric cars.

However, the final toll rate is set by the municipalities, so they will get to decide whether they want to increase the toll rate for zero-emission vehicles.

Continued electricity subsidies

One of the key items in the proposal – the electricity subsidy package – is estimated to amount to a total of 7 billion kroner.

The package should ensure continued electricity subsidies for Norwegian households throughout 2023.

For example, if the proposal is adopted, the estimated subsidy for power consumption of 22,000 kW/h in southeast Norway would amount to 33,000 kroner in 2023.

Social assistance and unemployment benefits

In an attempt to save up to 200 million kroner next year, the government is proposing to reduce the earnings period for unemployment benefits from three to one year.

According to the proposal, the resulting savings would be even greater in the long term. The government also wants to adjust the level of labour market measures, which could cut expenditure by around 700 million kroner.

Furthermore, the budget envisions continued specific upward adjustment of indicative rates for social assistance, as well as an extended period of work assessment allowance (AAP) for recipients who need more time for assessment, and a holiday supplement for unemployment benefits.

The government will increase housing allowance and financial assistance for food banks. 

Public welfare services

The budget makes room for growth in the municipal sector’s free income to secure key welfare services in Norway.

It also entails a package of measures to keep and recruit more general practitioners – a burning issue in the country’s healthcare system.

The effects of the pandemic on mental health and substance addiction in the country have figured prominently in the public debate, and the government plans to address the issue through a targeted package of support measures in the area.

Furthermore, it is also increasing funding for grants for social inclusion measures for children and young people.

Daycare/pre-school

As previously announced by Minister of Education Tonje Brenna of the Labour Party, the government plans to reduce the maximum price for daycare to 3 000 kroner per month.

If the proposal is adopted, from August 1st, daycare will be free for all children in Finnmark and Nord-Troms, and – in the rest of the county – for the third child in families that have three children in daycare at the same time.

The reduction in the fixed price should amount to 50 kroner per month compared to the current price, but the government’s planned allocation for preschool measures amounts to a total of 426.2 million kroner.

Out of that total, the reduced maximum price for pre-school places will cost Norwegian taxpayers 329 million kroner, while the expense of free pre-school for the third child and the measures supporting pre-school in the north amount to 20 million and 77.2 million kroner, respectively.

Children in the 2nd grade will receive up to 12 hours free each week. 

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UKRAINE

Norwegian PM: Norway not a ‘war profiteer’

Norway is growing richer by the minute as the conflict in Ukraine boosts its gas revenues, but it is not a "war profiteer", its prime minister told AFP in an interview.

Norwegian PM: Norway not a 'war profiteer'

“It’s a notion that I flatly refuse”, Prime Minister Jonas Gahr Støre said after visiting a liquified natural gas plant near Hammerfest in the Arctic, hinting that Norway would soon become one of the world’s biggest donors to Ukraine with an upcoming aid package.

Hinting that Norway would soon become one of the world’s biggest donors to Ukraine with an upcoming aid package, Prime Minister Jonas Gahr Støre dismissed the unflattering “war profiteering” allegation made by those who want Oslo to do more for Ukrainians.

“It’s a notion that I flatly refuse”, Store said Tuesday after visiting a liquified natural gas plant near Hammerfest in the Arctic.

His government is putting the final touches on a “multi-year support package” to be announced in the coming days, designed to help Ukraine and poor countries affected by the knock-on effects of the war, such as soaring grain prices.

The aid will help them “in maintaining their civil infrastructure, hopefully one day rebuilding a free Ukraine and in the meantime also supporting them militarily”, he said. The amount and details will be announced “early in February”, he said.

Støre rejected the notion, put forward by Poland’s prime minister among others, that Oslo was, albeit involuntarily, taking advantage of the war in Ukraine for its own financial gain.

Since last year, the Scandinavian country has redoubled efforts to help compensate the drop in Russian gas supplies to Europe following Moscow’s invasion of Ukraine.

Oslo has boosted gas exports by 8 to 10 percent and is now Europe’s biggest supplier, helping the continent stay warm this winter. With gas prices high, that means Norway’s coffers are overflowing.

This year, the government has forecast its biggest ever budget surplus of 1.12 trillion kroner ($113 billion). That cash will help fuel Norway’s sovereign wealth fund, already the world’s largest, worth more than 13.4 trillion kroner ($1.34 trillion).

“Norway has for 50 years been an explorer, at some risk, and seller of energy resources, oil and gas”, he said. “Norway does not fix those prices”.

The higher gas price, he noted, has also led to soaring electricity bills for Norwegian families and companies, which is “politically a big challenge
for us” in a country that relies heavily on electricity, including for its industry, heating and transportation. 

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