(Bloomberg) -- Norway's new government is proposing to cut electricity charges to protect households from the effects of the energy crisis, while raising taxes on the wealthy, as it makes changes to a 2022 budget drafted by its predecessors.
The Labor-Center minority coalition's proposal includes a new, lower electricity tax rate for the winter months, it said on Monday. The budget, which the government will need to negotiate through parliament, also raises the wealth tax levied on shares, operating assets and property by 10 basis points to 0.95% next year.
With elections held in September, it's a tradition that the outgoing cabinet presents the budget in October and the new government makes adjustments after taking power. That brings continuity by limiting the changes that can be made to the spending plan, but allows incoming governments to signal where they plan to steer the economy.
“We rely on income from taxes to provide people with high quality services throughout the country, but it's time for costs to be distributed more fairly,” Finance Minister Trygve Slagsvold Vedum said in a statement. The structural non-oil deficit, a measure of total spending, was kept unchanged from the previous government's plans at 322.4 billion kroner ($37.8 billion), or 2.6% of the sovereign wealth fund.
Norway Keeps 2022 Spending at Same Level in Amended Budget
Norway, western Europe's biggest oil producer, uses the world's largest sovereign wealth fund to plug budget deficits, and has resorted to withdrawals on a record scale in the past two years. This helped the economy to return to its pre-pandemic level in the second quarter, faster than most other developed nations, with the central bank beginning to raise borrowing costs as the first among the so-called G-10 group of the world's major currencies.
Read More on How Taxing the Rich Is Making a Comeback in the Nordics
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