Government presents budget for 2023
Press reports on tough measures for tough times
Responsible economic policy and reduced use of oil money are the keywords for the government’s state budget, which has been referred to as by far the tightest in a long time.
On Oct. 6, Finance Minister Trygve Slagsvold Vedum (Center Party) presented his first state budget.
Both he and Prime Minister Jonas Gahr Støre (Labor Party) have repeatedly warned that this budget will be tight. They have emphasized that many will be disappointed. Terms such as “responsible economic policy” and “reduced use of oil money” have been mentioned frequently.
When the government presented its policy for the next parliamentary year in the ceremonial opening of the Storting on Oct. 3, rising prices and the war in Ukraine were consistent themes.
“There is war in Europe, extensive droughts and floods as a result of climate change, rising prices, rising interest rates, and an acute energy crisis in large parts of the world,” said the king on behalf of the government.
This was the backdrop when the state budget was presented on Oct. 13. Støre told NTB that throughout his time in government and the Storting for 20 years, there have never been tougher measures than what the government is doing in this national budget.
“For the first time in decades, our part of the world is experiencing inflation. If it gets stuck at a high level, we’re in big trouble. Then we have to take action early, and those measures are tough,” said Støre.
The Socialist Left Party (SV) is the government parties’ preferred negotiating partner on the budget and thus holds the key to securing a majority for the budget in the Storting.
SV leader Audun Lysbakken has promised the government that the budget negotiations will be tough, and the party has announced that they will look for a clear climate profile in the state budget when it is presented.
The war in Ukraine has led to the most dramatic security policy situation Europe has seen in 60 years. This has had consequences for the Norwegian defense.
Defense Minister Bjørn Arild Gram (Center Party) promised more money to strengthen Norway’s armed forces. However, the details of this were not made known in advance.
In addition, the government increased support to Ukraine by up to NOK 10 billion in 2022 and 2023, of which NOK 3 billion will be allocated next year.
The government has proposed introducing a ground rent tax for the aquaculture industry and increasing ground rent taxation as well as introducing a high price tax for energy producers. In total, this will increase tax revenues by NOK 33 billion annually.
The comprehensive measures are intended to close the gaps in the national budget. Costs for electricity support and defense and ever-increasing expenses for national insurance make it necessary to obtain new income, according to Støre and Vedum when they presented the proposal in early October.
There will be a six-point plan for electricity savings. The list includes NOK 1.1 billion for Enova, which will be used to conserve electricity in Norwegian homes.
The state budget also contains a number of other tax measures, including raising dividend tax in addition to income tax for those who earn over NOK 750,000.
Doctors, culture, and diesel tax
NOK 690 million will go toward strengthening the general practitioner program, reported VG. At the same time, the Norwegian Institute of Public Health (FHI) can expect a sharp cut, according to Aftenposten, which writes that it is estimated that close to 250 positions may be cut.
The culture sector, which has put two demanding pandemic years behind it, has been warned that many of the government’s cultural promises from the Hurdal platform will be put on hold. In last year’s budget, about 0.9% of the state budget went to culture, and the proportion will not be higher in this year’s budget, the government has announced.
The diesel tax will be cut by NOK 1.3 billion, Dagbladet wrote. The tax cut involves a reduction of around 50 øre of the price at the pump after an increase in the CO2 tax and tax on biofuel have been factored in.
At the same time, the government plans to offer free kindergarten to everyone who lives in the action zone in Finnmark and Nord-Troms, according to NRK.
More leaks on the new state budget
* The rate for wealth tax may be increased, according to Dagbladet. Last year, the rate was increased by 1.35% for those with assets over NOK 20 million, following negotiations with the Socialist Left Party on the state budget.
* Several road projects may be postponed, among them the E134 Oslofjord connection, E134 Røldal-Seljestad in Vestland, E6 Megården-Mørsvikbotn in Nordland and E16 Hylland-Slæen in Vestland. Initiated projects will not be postponed or cut, including the controversial development of the E18 westward (West Corridor).
* According to NRK, the government proposes that foreign students will have to pay for their education in Norway going forward.
* According to Vårt Land, the target of providing 1% of the national income in foreign aid will probably fail in the state budget for 2023 due to large oil and gas revenues. In 2016, a majority in the Storting decided that 1% of GDP should be set aside for aid in the annual budgets.
* The trade union deduction increases to NOK 7,700, sources informed Dagbladet.
* According to VG, the government has set aside NOK 96 million in additional funds for sports equipment and leisure activities for children and young people.
* High school students receive an increased stipend. In total, the government proposes to increase the funds allocated for grants to students who live away from home by NOK 57.3 million and the equipment grant by NOK 50.1 million in 2023. For the living-away stipend, this means an increase of NOK 660 per month, the Center Party and Labor Party informed Adresseavisen and VG.
* The oil tax package will be continued in the government’s proposal for the state budget, but there may be adjustments, Dagbladet learned. There may be adjustments in or around the oil tax package to collect more money directly from the oil companies. These amounts could be in the billions, according to sources with insight into the newspaper’s budget work.
* The government will spend NOK 900 million on young people who are struggling, in what they call the “youth pledge.” In its proposal for the state budget, the government will prioritize several measures to help young people into work or education. They will also strengthen mental health services.
This article originally appeared in the November 4, 2022, issue of The Norwegian American.