Press Release

18/98,
23.04.98

Norwegian Government proposes New Green Taxes

Today the Norwegian Government proposes New Green Taxes as a follow up of the Norwegian Green Tax Commission. The estimated increase in Government income from green taxes (NOK 2.7 billion) is partly to be used to compensate the most affected sectors. The processing industry will be compensated for the CO ₂- tax. The taxation of labour is reduced by nearly NOK 1.4 billion.

The Proposition no. 54 (1997-98) is submitted to the Storting (Parliament) together with a White paper from the Ministry of Environment on the follow up of the Kyoto Protocol. The Kyoto Protocol is an important framework for the proposals on green taxes. The Government’s aim is both a cost effective environmental policy and to shift the tax burden away from labour and towards environmental harmful activities.

The Government proposes an increase i green taxes in the following areas:

• An extension of the CO ₂-tax. Almost all production processes and end uses will face a minimum CO ₂-tax of NOK 100 per ton. More than 40 per cent of the current CO ₂-emissions are exempted from the CO ₂-tax. The extension of the tax base will mainly affect the production of metals, industrial chemicals, cement, refinery products, domestic use of gas (gas power), fisheries, domestic ocean transport and air transport.
• An introduction of a state tax on final waste treatment. Waste delivered to landfills or combustion plants will be taxed at a rate of NOK 300 pr ton. Combustion plants that utilise waste for energy purposes will pay a lower tax (minimum NOK 150 per ton).
• An extension of the SO ₂-tax. A low rate is proposed, NOK 3 per kg SO ₂, for sources that are not taxed today. The present SO ₂-tax on mineral oils is NOK 17 per kg.
• An introduction of tax on autodiesel oil used in buses. To avoid negative effects on public transportation, regular bus services are compensated for the cost increast due to the tax on autodiesel oil and VAT.
• An exemption from the investment tax for investments in renewable energy sources like plants for biofuels, windmills and heat pumps. The Norwegian investment tax amends to 7 per cent of investment costs. A subsidy to production of electricity from windmills, corresponding to half the consumption tax on electricity is also proposed.

To reduce adjustment costs for the most affected sectors and regions, the processing industry will be fully compensated for CO ₂-taxes on inputs used as reducing agents or raw materials. The suggested compensation scheme will be related to output of the products (tons of aluminium, ferro-alloys, carbides etc.), and will be set irrespective of the CO ₂-emissions from the individual firms. This will contribute to emission reductions as well as maintaining the activity in the most affected part of manufacturing. The compensation will be maintained until the Kyoto Protocol is ratified by a sufficient number of countries. Thereafter the compensation will be gradually reduced until 2010, when it is removed. The Government will carefully follow the development for industries located in areas that lack varied industrial activities, and are dependent on the activity of these companies. The Government will carry out necessary efforts to facilitate readjustments in this areas. It is also proposed to compensate fisheries for costs related to the CO ₂-tax. The excise duty on airplane seats will be reduced corresponding to the CO ₂-tax on aviation fuels.

The proposals also include a reduction in labour taxes. It is proposed that the employers` social security contributions are reduced by 0.1 percentage points. A reduction in personal income tax by increased standard deductions for wage earners is also proposed.

Contact: Anne-Sissel Skånvik, telephone +47 22 24 41 09