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This morning the Norwegian government will present a proposal for a resource rent tax on aquaculture (known as the “salmon tax”). This plan imposes finally a tax of 35% in two different phases for 2023 and 2024.
The Norwegian government claims that the intention of the proposal is the actual redistribution of the revenue generated by the aquaculture industry. It ensures the local communities along the coast and Norwegian society receive a major part of the value created. Prime Minister Jonas Gahr Støre (Labour Party) explained that in Norway “we have a long tradition […] which value that is created from using our common natural resources shall benefit society as a whole.”
Finance Minister, Trygve Slagsvold Vedum (Center Party), stated that this is a step forward, as was the tax on income from petroleum resources. In Vedum’s words, it has played “an essential role in the creation of the Norwegian Government Pension Fund” and “salmon tax” is a logical extension of this “tradition”, which “will create jobs and generate profits, while local communities and society can also receive a share of this value by making coastal areas available to the industry.”
Characteristics of definitive proposal
The government proposes to set the tax rate at 35%. Thus, revenues will be based on the market value at the time of the harvested fish from the pen, as determined by the companies themselves by 2023, which lays the basis for the tax refund.
Moreover, the Norwegian government proposes a slightly lower rate of initial estimation tax and also proposes to facilitate the transition to higher general taxation through a valuation allowance for aquaculture licenses in property tax.
From 2024, the objective would be to establish a separate price board for salmon, trout and rainbow trout. A standard deduction of NOK 70 million, would imply in the government’s own words that “only companies with significant profits will pay resource rent tax”. This would make half of the revenue accruing to the local sector, especially for the host towns, which will receive a larger share.
The tax will be effective as of January 1, 2023, so that means it would be retroactive.
The importance of municipal participation
In the proposal, the participating municipalities have a leading role. Municipalities and counties with fish farms will receive more money by increasing the production tax (up to 90 øre per kg) and therefore increasing the municipal sector’s share of auction revenues from 40% to 55%, etc.
Furthermore, to ensure that the entire aquaculture region receives a larger contribution than at present, the Government proposes sharing the Aquaculture Fund. This would be distributed to the counties and would cause it to increase from 12.5% to 20%.
Vedum explains that “at least half of the revenues that come in will be returned to the municipal sector.”
Regarding this, the government clarifies that this rate automatically adapts to the industry’s profits, so that it does not collect a specific amount in tax revenues, but a part of the value created.
Finally, Støre states that “the aquaculture industry is one of Norway’s largest and most profitable industries. The average returns generated in this sector during the last decade have been 3-4 times higher than in manufacturing. A larger share of this should accrue to society as a whole, while at the same time, we also support the industry continuing to develop and create jobs and value along our coast into the future.”
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