The tax credit for the oil industry is the cause of the high interest rates

Global Courant

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The rise in interest rates and inflation that we are now experiencing can be traced back to the tax package adopted by Erna Solberg’s government during the pandemic.

The package, later agreed to be too generous, is still working for more investment in the linear fossil industry. This, along with shelf electrification, makes the industry a persistent reason why you and I are now grappling with higher interest rates and prices.

The interest rate rises due to the heating up of an oil-driven Norwegian economy have been noticed by many.

Klaus Mohn wrote in Aftenposten this spring about how the tax package works; “The tax cut for the oil industry has led to more economic activity – and higher interest rates than we otherwise would have had. Without the tax package, the latest recovery could have been curbed, the winding down of oil activity could have been more gradual, and the transition could have been smoother and cheaper.”

Hans K. Mjelva in Bergens Tidene has also highlighted how the oil tax package, which was designed to secure manufacturing jobs, is instead causing inflation and a scramble for labor; “The package provided very favorable tax conditions for new investments (… ) It worked to their advantage. Never before have plans been submitted for such large investments as last year.”

Britta Steel More…

And finally by Anders Bjartnes in Energy & Climate, who clearly sums up cause and effect; “More than any other industry, the oil industry is able to set the framework both for its own business and for the rest of the Norwegian economy.” Bjartnes notes that the “tax-stimulated oil activity can prevent restructuring because it costs too much labor and other real economic resources’. Right now, these real economic resources are electricity, for which you and I pay the price.

The government is not going to calculate how much the state has lost to the oil tax package: – Not very useful

There is a threat of a welfare crisis in Norway – and no, it is not about a decline in activity on the Norwegian continental shelf. The tax package for the oil industry has been allowed to have a downward effect on investment in renewable energy, and so far has only contributed to the oil sector not having to bear its own costs. Households and small businesses on the land are left with the bill. If the government does not recognize this quickly and turn the lever, we will only have even higher inflation, and higher costs for electricity, food and interest.

The government must use its toolbox smarter, faster and, last but not least, with less oil in mechanics if we want to emerge from the crisis. What if we could instead use fiscal policy and management tools in a way that doesn’t touch consumers and drive growth across industries? The linear growth potential in the oil industry can be used to fund and implement a true green shift, as suggested by making better use of the windfall principle, among other things.

Norway’s role as an energy nation has historically sought to be depoliticized in foreign and security policy. It has thus become a management objective for Norwegian energy policy to be market driven. But today’s tax package will skew things, both for the various energy industries and for most people. At the moment it is money that matters, and the tight autumn for most people can be attributed to a tax package from the Conservative Party and others. and a bunch of satisfied lobbyists in 2020.

Let’s hope that today’s government can let go of the package and take back power and pride – because at the moment it is others who control the fate of the Norwegian economy.

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The tax credit for the oil industry is the cause of the high interest rates

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