Today was the consultation deadline for the public inquiry “A holistic tax system”. The tax committee was set up by the Solberg government to assess changes that could get more people into the workplace and increase investment in private business. With a view on how to keep the socio-economic costs of the tax system low.
The committee has continued by the Støre government with an adjusted mandate: Assess how the tax system can contribute to redistribution, including the role of wealth tax and changes that can provide better geographical distribution.
In its response to the hearing, Regnskap Norge has emphasised the importance of a predictable and stable tax system for business. Likewise, the overall tax burden must be at a level that is not too high. Most companies in Norway are small: the country’s 630,000 small and medium-sized businesses make up 99 percent of the business world. Norway depends on a well-functioning business community where the owners are willing to invest, says Rune Aale-Hansen, Regnskap Norge CEO, in a press release through Accounting Norway:
– The tax burden has increased sharply in the last 1.5 years. This has probably led to a number of investors emigrating or putting investments on hold. We need more thorough analysis of why Norwegians should invest and accept a higher tax burden in Norway than in other comparable countries.
In its response to the consultation, Regnskap Norge points out that predictability, stability and competitiveness vis-à-vis foreign countries are important for business. Major changes to the current system should therefore be adopted by the widest possible parliamentary majority. At the same time, they remind us that it is not taxes that create welfare – it is the income that generates the taxes. Rune Aale-Hansen clarifies in the press release:
– In principle, we believe that tax on working, industry-related capital should be abolished. It neither takes into account a company’s profitability nor that this capital is not available for private consumption. It also favours foreign owners who do not pay wealth tax. We are also critical of reintroducing inheritance tax. It will make it more difficult to carry out generational changes in Norwegian businesses, especially in the country’s many small family businesses.
Regnskap Norge supports an overarching principle of one VAT rate, as the committee proposes. A basic principle in VAT law is that VAT must be neutral and not distort competition. Differentiated rates weaken this. Though in its report, the committee has not proposed abolishing all of the current low and reduced rates, probably as it is unrealistic to implement politically.
Regnskap Norge therefore encourages the Ministry of Finance to assess the individual goods and services with a low and reduced rate and to decide on any mitigating measures based on target achievement, accuracy and administrative burdens.