Norway targets electricity producers and fish farmers with resource tax

Norway is to impose $3bn of tax increases on electricity producers and fish farmers as its centre-left government argues they should share more of the profits they extract from common resources with the rest of society.

The Scandinavian country will introduce a resource tax on aquaculture and wind power, raise the existing tax on hydropower and impose an extraordinary levy on wind and hydropower in response to spiralling electricity prices.

Norway aims to curb high inflation by reducing the amount it takes from its $1.2tn oil fund and is instead looking for new taxes to balance increased spending on electricity subsidies for households and businesses because of Europe’s energy crisis.

Norway is one of the biggest economic beneficiaries of Russia’s full-scale war on Ukraine as it has become the EU’s biggest gas supplier and its energy companies are earning record amounts.

The Norwegian government is set to earn NKr1.5tn ($137bn) in petroleum revenues this year and NKr1.9tn next year, according to economists at bank Nordea.

Norway’s government is coming under pressure to share those gains both internationally — as it seeks to head off charges of war profiteering — and domestically as households and companies are hit by higher energy prices.

Norway’s approach of increasing taxes on electricity producers and fish farmers stands in contrast to that of the new government in the UK, which has ruled out imposing windfall taxes on energy companies.

Norway’s prime minister, Jonas Gahr Støre, said after years of increasing inequality, “it is vital that those who have the most, and in many cases have gained significantly more in recent years, contribute more”.

He added: “An important part of this will be to ensure that the values that come from our natural resources must be distributed more equitably than today.”

Fish farm shares fell on Wednesday after the announcement. SalMar, Grieg Seafood, Lerøy Seafood, and Norway Royal Salmon were all down more than 20 per cent in midday trading.

Representatives of the affected industries reacted furiously, warning that the government was threatening Norway’s future prosperity.

Geir Ove Ystmark, head of the Norwegian seafood federation, said: “What the government is actually proposing is to slaughter one of the most important industries for Norway’s future.”

Knut Kroepelien, head of lobby group Energy Norway, said: “The tax measures the government is presenting could lead to a deeper and longer energy crisis.”

Trygve Slagsvold Vedum, finance minister, said the government had two ways to close the budget gap as it sought to reduce the use of money from the oil fund: big cuts in welfare or tax increases. “Spending cuts that provide funding of the magnitude needed now will not be compatible with the society we wish Norway to be,” he added.

The tax increases should raise about NKr33bn, a third of the NKr100bn the government expects costs to rise by in 2023 because of increases in welfare payments, integrating Ukrainian refugees, construction projects and electricity subsidies.