This is how the state budget will hit your wallet

Finance Minister Siv JensenFinance Minister Siv Jensen.Photo: Heiko Junge / NTB scanpix

Here are the winners and losers of this year’s state budget.

 

Tax:
Low-income families have to pay more taxes, while those who can afford a Tesla will get a new one-time tax fee on top.
Married couples where one cares for the other are the big losers in the state budget for next year. The government will remove tax class 2, which provides higher personal deductions, and more favourable taxation for married couples where one partner has low, or no income.

Income tax is reduced from 24 to 23%. That means, on average, 400 kroner in tax cuts for those who earn 750,000 to one million kroner, while those with an income of a million or more will receive, on average,1,700 kroner less in taxes.

The property tax will continue, but the government will reduce the municipalities’ ability to introduce, or increase it. At the same time, there is a new tax on short-term rental of housing that will hit those who have thrown in on the Airbnb wave.

Higher VAT:

Saved tax credits may, however, disappear into higher VAT. The government will increase the lowest VAT rate, so called ‘fun taxes’, from 10 to 12%. It will make it more expensive to go to the cinema, take a bus, and taxi, watch football or stay in a hotel.

‘This means that most people get tax cuts on one side, and expense increases on the other. It is therefore not easy to say who is the winner in this state budget,’ said financial adviser, Hanna Folkvord, of DNB Markets to NTB news agency.

Increased interest rate burden:

Lower taxes also mean that the value of mortgage income is reduced. For a family with NOK 3 million mortgage debt, the effect now amounts to NOK 3,000 a year compared to 2015.

If the rates are doubled to 5%, it means a cost increase of NOK 6,000, according to the consumer economists in Sparebank 1.

Daycare and single parents:

Unemployed and single parents may meet more hard times. The government proposes to tighten the rules for unemployment benefits, since it will not be possible to collect benefits after a three years period.

Thus, one must have earned at least 1 G (93 634 kroner) over the past year in order to qualify for unemployment benefits. The government will also cut support for single parents by 13%.

Share Discount:

Unsurprisingly, the winners in the state budget are equity-savers with high wealth. The government proposes that shareholders only have to pay wealth tax for 80% of the value of the shares.

That means a 20% tax rebate for those who are in a position to pay wealth taxes. The government proposes such a ‘share rebate’ to save more in equity, rather than housing, thus contributing to growth in the economy.

This ‘gift package’ has a price tag of around 765 million kroner.

Electric cars become more expensive:

The government will introduce a one-time fee for electric cars, similar to those for hybrid cars. The fee will apply to electric cars with a weight exceeding two tonnes. A heavy Tesla could thus cost 70,000 kroner more, while lighter electric cars get a fee as low as 7,000 kroner. It is also more expensive to have an electric car as a company car. Incentives for electric cars, such as free toll-passing, are being continued.

Other changes:
Kindergarten: the government proposes to raise the maximum price for a kindergarten place by NOK 110 per month, to NOK 2,910 from January the 1st, 2018.

Commuters will lose the deduction of 205 kroner a day if they can cook in the home.

Alcohol faces a proposed increase in prices of 1.6%. A bottle of wine goes up by approximately one kroner, and one litre of spirits by almost kroner. In total, the tax on a bottle of wine in Norway has now reached 70 kroner.

Smoking, snus and candy are also more expensive after price increases of between 1.5 and 1.9%.

Doctor visits: The proprietary share will increase by 1.8%.

More expensive electricity. The electricity tax increases to 16.58 per kilowatt.

NRK license fees increase by NOK 108, to NOK 2,976 in 2018.

Fuel fees won’t change, but the fee will be adjusted.

Cash support won’t be adjusted vis a vis the price, and will go up to NOK 7,500 per month for children between one and two years old.

 

©  NTB Scanpix / Norway Today

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