Tax hikes planned for Norwegian oil drilling

jens-stoltenberg-littleOil companies and multi-nationals involved in the industry face increased taxes as the prime minister laid out tax reforms ahead of his election campaign.

Prime Minister Jens Stoltenberg has proposed cutting corporate taxes by one percentage point, in line with regional trends, but wants to pass the cost on to the offshore industry.

Starting in 2014, mainland companies can save up to 2.4 billion kroner (US$413 million) if the proposal goes through. Meanwhile, special petroleum tax edges up from 50 per cent to 51 per cent.

“Some sectors are performing very well, pushing prices and salaries higher,” Mr. Stoltenberg said at a news conference. “At the same time, businesses that can’t increase prices because they depend on global markets are squeezed by high costs and lower demand from abroad.”

While the oil industry has kept everyone employed and the treasury in good health, the rest of the country has become dependent on this and there is a feeling that companies outside the energy sector no longer remain competitive.

The move is partly in response to a cut in corporate tax in Sweden to 22 per cent, and in Finland to 20 per cent, in order to attract investment and boost economic stagnation.

“We think we give a better signal to the oil companies when they must now bear a bigger share of the investments themselves, not the least because we need more cost awareness in that sector,” said Stoltenberg.

The state has had to foot the bill of most of the 49 billion kroner in cost overruns from 24 oil projects under development.

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