Norway hikes tax on oil and gas industry for 2023

OSLO  – Norway‘s center-left government said on Thursday it planned to raise taxes on the country’s oil and gas industry by 2 billion Norwegian crowns ($191 million) in 2023 by partly reversing an incentive package introduced during the coronavirus pandemic.

The adjustment to the temporary rules follows a surge in oil and gas prices, the government said.

“When aggregated over the years in which the temporary rules will apply, central government revenues are estimated to increase by 11 billion crowns,” Finance Minister Trygve Slagsvold Vedum said in a statement.

Norway, Europe’s number one gas supplier and a major global crude producer, pumps around 4 million barrels of oil equivalent per day, ensuring big financial gains from the spike in energy prices.

The proposal reduces the so-called uplift rate, a special tax deduction, to 12.4 percent from 17.69 percent, the finance ministry said.

“With the government’s proposal, all profitable investments before special tax will also remain profitable after tax,” said Vedum, who leads the rural-oriented Centre Party.

The left-leaning minority government of Labor and Center said it planned to cut spending in 2023 by the $1.2 trillion sovereign wealth fund, the world’s largest, while raising taxes to help combat rampant inflation.

The government proposed withdrawing 316.8 billion crowns from the wealth fund next year, down from a revised 335.1 billion crowns in 2022, and must now negotiate with the Socialist Left Party to pass the budget.

Gross domestic product for the non-oil economy is expected to grow by 2.9 percent this year, declining to 1.7 percent in 2023 before rebounding to 2 percent in 2024, the ministry said.

($1 = 10.4670 Norwegian crowns)