Norway To Scrap Industry Electricity Tax

The Norwegian government aims to abolish electricity taxes on all businesses, extending the exemption beyond the manufacturing industry in 2004, Finance Minister Per-Kristian Foss said.

Foss said the government would raise the issue for discussion in parliament in connection with its revised 2003 budget in mid-May. But a finance ministry official said a proposal to abolish the tax would not come before the 2004 budget is drawn up in the autumn, and the change, if passed by parliament, could take effect from the beginning of 2004. "This will help all businesses including those in rural Norway," Foss told a Webcast news conference. Currently, the manufacturing, mining and quarrying industries, and residents of two northern regions, are exempt from a 0.095 Norwegian crowns ($0.013) per kilowatt hour tax on electricity paid by other businesses and most households. The outlined change is designed partly to satisfy the requirements of the EFTA Surveillance Authority (ESA) which considers the exemption for manufacturing industry to be unfair state subsidy, officials said. The planned exemption would only apply to businesses not households, nor would it affect the tax status of the northern residents who currently enjoy the exemption, a finance ministry official said. The official said that total electricity taxes this year are estimated at around 6.7 billion Norwegian crowns, of which about 1.7 billion is expected to come from firms and the rest from households and the public sector. Electricity is also subject to value-added tax (VAT) of 24% in Norway, and that tax on power would be unaffected by the minister's proposal, the official said. Electricity taxes are one category of excise duty. Total excise duties including the electricity tax are estimated at 67 billion Norwegian crowns in 2003, or less than 10% of total projected revenues of 718 billion crowns, according to the finance ministry's Web site.

But a finance ministry official said a proposal to abolish the tax would not come before the 2004 budget is drawn up in the autumn, and the change, if passed by parliament, could take effect from the beginning of 2004.

"This will help all businesses including those in rural Norway," Foss told a Webcast news conference.

Currently, the manufacturing, mining and quarrying industries, and residents of two northern regions, are exempt from a 0.095 Norwegian crowns ($0.013) per kilowatt hour tax on electricity paid by other businesses and most households.

The outlined change is designed partly to satisfy the requirements of the EFTA Surveillance Authority (ESA) which considers the exemption for manufacturing industry to be unfair state subsidy, officials said.

The planned exemption would only apply to businesses not households, nor would it affect the tax status of the northern residents who currently enjoy the exemption, a finance ministry official said.

The official said that total electricity taxes this year are estimated at around 6.7 billion Norwegian crowns, of which about 1.7 billion is expected to come from firms and the rest from households and the public sector.

Electricity is also subject to value-added tax (VAT) of 24% in Norway, and that tax on power would be unaffected by the minister's proposal, the official said.

Electricity taxes are one category of excise duty.

Total excise duties including the electricity tax are estimated at 67 billion Norwegian crowns in 2003, or less than 10% of total projected revenues of 718 billion crowns, according to the finance ministry's Web site.