Society & Policy

Oil is not all

Norwegian Minister of Finance Per-Kristian Foss visited London last week to speak at an event arranged by the Norwegian British Chamber of Commerce. Mr Foss stressed that oil is important but not a deciding factor for corporate Norway to stay competitive internationally.

05/03/2004 :: Although a solid contributor, less than a quarter of Norway's gross domestic product comes from the petroleum sector. Other private mainland sectors contribute twice as much to Norway's GDP.

Mr Foss pointed out that labour productivity in the business sector has risen by 40 per cent in Norway since 1991, whereas productivity in USA has risen by 30 per cent and in OECD member states by a little over 20 per cent.

"Norway's economy is a high performing economy", Mr Foss said, pointing out that according to an OECD statistic from 2001 Norway's GDP per capita (adjusted for purchasing power parity) is the highest in the world, with the USA a close second. The statistic showed that even without petroleum, Norway would be second only to the USA in GDP per capita.

Trade relations between Norway and the UK are very good. Exports from Norway to the UK have risen by more than 50 per cent since 1992, and imports to Norway have risen by more than 25 per cent.

Mr Foss expressed concern over the increasing number of people on transfer schemes such as disability, sick leave, occupationally rehabilitation/medical rehabilitation and early retirement scheme.

Norway's tax system is based on a tax reform from 1992. Its objectives are to broaden tax bases, lower tax rates, reduce tax-induced distortions and to protect internationally mobile tax bases. The introduction of dual income tax means low flat tax on capital income and progressive tax on labour income.

Mr Foss said that there is a need to reduce the large gap between tax rates on labour and capital. Norway currently faces problems connected to dividing income from self-employment into capital and labour income. The high marginal tax rates impair work incentives. That net wealth tax is non-neutral between investments is a problem, said Mr Foss.
Reform work on tax policy includes a report from the Tax Committee February 2003, a public hearing (February - May), a forthcoming white paper on tax reform and first tax changes in the 2005 budget.

The event, held at the In & Out Club, No 4 St James Square on 23 February, was attended by corporate members and students alike.

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Minister of Finance Per-Kristian Foss

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