The proposal for the Norwegian State budget

Some of the major proposals by the Government for the State budget for 2018

NOK 9.2 billion towards research and innovation

With NOK 9.2 billion, the Government is focusing heavily on industry-oriented research and innovation.

The Norwegian Government proposes to allocate a total of NOK 9.2 billion to business-oriented research and innovation in this year’s state budget.

Included in the grant proposal is a calculated tax deduction stemming from the Tax Financing Scheme and Capital Funds.

– The Norwegian economy is facing major changes. In all budgets, the Government has therefore prioritized conversion. Research and innovation can bring forth new ideas and solutions. Therefore, we will continue with the investment next year, says Monica Mæland, Minister for Industry (Conservatives).

This year’s allocation involves an increase in research and innovation funding of around NOK 4.3 billion from 2013.

The Government proposes NOK 3 billion in reduced taxes

The Government is proposing tax deductions of NOK 3 billion in the state budget for 2018.

The main part of the change will only be effective from 2019, but the net effect next year will be NOK 700 million.

In the tax settlement, the Parliament agreed to reduce the tax rate on ordinary income from 24 to 23 per cent for both companies and persons.

Additionally the Government proposes exemption from property tax on equipment used in production. The reasoning is that it will make it more profitable for businesses to invest in more workplaces.

NOK 92 million towards forest roads in the budget

The Government wishes to grant a grant of NOK 92 million to Norwegian forest roads. Thereby, the Government’s commitment to forest industries continues.

The Government proposes to allocate NOK 92 million to forest roads in the year’s state budget and a commitment of NOK 95 million for construction and improvement of forest roads and timber depots.

– This results in significantly reduced transport costs and improved competitiveness in forestry and related industry. It provides a basis for employment and value creation along the coast and in the districts. At the same time, the forest binds CO₂, and wood is a climate and environmentally friendly alternative to fossil fuel, says Minister of Agriculture, Jon Georg Dale.

– The Government is continuing its efforts regarding forest roads. Last year, subsidies was increased by NOK 29 million. Since the previous Government, subsidies towards forest roads have been doubled, according to Dale.

The Government is slashing the support of the press

The Government wishes to change the grant scheme and proposes a reduction of NOK 25.7 million in the production grant to news media.

NOK 7 million will be set aside for an innovation based grant scheme in 2018. This implies a net slash in the direct press support of NOK 18.7 million, according to the Government’s budget proposal.

The new scheme will be aimed especially at journalistic innovation and digitalization at local newspapers.

The Ministry of Culture indicates that an innovation-based grant scheme was one of the proposals for the Media Diversity Committee, which delivered its whitepaper on March 7 this year.

– The other measures proposed by the committee will be considered thoroughly and comprehensively in a parliamentary announcement that is planned to be promoted before the summer of 2018, it is stated in a press release from the ministry.

Aid budget increases

The Government wants to spend around 3.8 per cent more on development aid this year, according to the proposed state budget.

In the draft for 2018, NOK 35.1 billion has been set aside for foreign aid.This is an increase of NOK 1.3 billion from this year and amounts to about 1 per cent of next year’s gross domestic product (BNP).

According to the Government, assistance should be spent on five main areas, namely education, health, relief, business development & job creation, climate and environment & renewable energy.

Support for religious minorities increases by NOK 30 million to 78 million.

– Religious minorities are among the most vulnerable groups in war and conflict, says Minister of Foreign Affairs, Børge Brende (Conservatives).

The Government with Airbnb Tax

The Government proposes to remove tax exemptions for rental agreements lasting less than 30 days. The proposal is in line with the recommendations of the Shared Economics Committee.

Tax on short-term rental of part of your own accommodation will give hotels and other traditional accommodation companies the same competitive conditions as those who rent their home through services such as Airbnb, says Minister of Finance, Siv Jensen (Frp).

For rentals that extend beyond 30 days, the tax will remain as it is today.

– Many families finance their home in part by renting out parts of it. It is of importance to the Government that households have predictability in their finances, says Jensen.

NOK 15 million to fronts Norway as the focus at book fair

Norway will be the country focused upon at the book fair in Frankfurt am Main in 2019, and the Government wishes to allocate NOK 15 million for this purpose next year.

NOK 5 million is allocated to the Ministry of Foreign Affairs budget and NOK 10 million from the Ministry of Culture’s budget, according to the Government’s proposal for state budget. In total, a commitment is made of 30 million distributed between 2018 and 2019.

It is the NORLA Center for Norwegian literature abroad that is responsible for the planning and implementation of the project.

The Government wants to cut in support to folk high schools

For the third time in four years, the Government proposes in the state budget for 2018 to cut in support to Norway’s folk high schools.

In the state budget, the Government proposes to cut funding to private higher education institutions by NOK 25 million. Additionally the Government proposes to cut the student funding by NOK 11 million.

– We are very disappointed with the proposal the Government is presenting today, says general manager of the People’s College Council (Folkehøgskolerådet), Odd Arild Netland, in a press release.

In autumn 2017 in excess of 7700 students started at a folk high school. It is new record for the third consecutive year. The budget does not account for student growth and, as a result, another nine million is missing from the budget, the People’s College Council writes.

– The cut will have major consequences for both individual schools and pupils, and unambiguously affects at a time when folk high schools have a record number of students, says Netland.

Before the parliamentary elections in September, the KrF, the Liberals, the Socialists and the Centre Party all promised to work towards increased funding for folk high schools.

NHO boss: – A good budget for workplaces

– This is a good state budget for Norway and Norwegian businesses, says NHO boss Kristin Skogen Lund. She specifically points to the removal of the so called machine tax.

The Leader of the Organization of Norwegian Businesses (NHO), is very pleased that the tax on machinery and production equipment is proposed removed:

– This unpredictable tax is an obstacle for budding businesses and a major disadvantage to established businesses. It may entail that foreign companies does not choose Norway, as an example that large IT giants do not build data centers here. Small and large industrial facilities are an advantage for municipalities, because they provide jobs and increased demand for local businesses, she says.

NHO believes that the Norwegian economy is in a sound state, and that it is therefore appropriate to reduce the growth in oil fund usage and to largely discontinue the crisis measures that were important for the affected areas.

– The patient is no longer sick. Medication can therefore be discontinued. Therefore, it is good that the Government reduces the growth in oil money usage in the next year’s state budget, says Skogen Lund.

The NRK license is increased by NOK 55

The NRK license will be increased by NOK 55 next year. That is the same as the public broadcaster asked for.

In the draft government budget it is proposed to set the broadcasting fee to NOK 2,922.70 a year, against NOK 2867.70 this year. The increase is 2.1 per cent.

– NRK is one of Norway’s most important cultural institutions and a key instrument for achieving the media policy goals. The goal is for NRK to fulfill its overall public commitment side by side with a healthy private and commercial sector, according to the budget proposal.

In its budget proposal last year, the Government froze the license at the 2016 level, but after negotiations in the Parliament, the license ended up being NOK 30 more expensive.

Key figures from the state budget for 2018

A few economic headlines in the budget for 2018.

Total expenses: 1.325.2 billion, an increase of 1.8 percent.
The actual underlying growth in government spending from 2017 to 2018 is estimated at 1 percent. Nominal growth is estimated at 3.5 per cent.
Gross domestic product Mainland Norway (percentage change in volume from the previous year): 2.5 per cent (2016: 1.0, 2017: 2.0).
Employment, persons (percentage change in volume from the previous year): 1.1 per cent (2016: 0.3, 2017: 0.7).
Unemployment rate, LFS (level): 4.0 (2016: 4.7, 2017: 4.3).
Budget Impulse (structural, oil-corrected deficit as a percentage of trend-GDP for mainland Norway. Change from previous year): 0.1 (2016: 0.7, 2017: 0.4).
Output percentage (Structural, oil-corrected deficit as a percentage of the capital of the Government Pension Fund Global at the beginning of the year): 2.9 (2016: 2.7, 2017: 2.9).
The use of oil prices actually increases by NOK 6 billion and amounts to NOK 231.1 billion of oil revenues in 2018.
The oil fund is expected to have a value of NOK 8,465 billion by the end of 2018.
The Government’s proposal contains new tax reliefs in 2018 of approximately NOK 3 billion accrued and NOK 0.7 billion recorded.