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The thought of an election in one country being decided by the fate of 500 rich people in another might seem absurd. But such is the controversy around a wealth tax these days that this is just what could happen in Norway, itself one of Europe’s richest countries.
Hundreds of the Scandinavian country’s business people and entrepreneurs have fled the icy north for Switzerland in recent years, largely in protest at changes to Norway’s long-standing wealth tax made by the centre-left government in Oslo. Local bank DNB estimates more than 500 Norwegians with at least SFr2mn ($2.5mn) are in Switzerland.
They are now at the heart of the centre-right’s attempts to retake power in Norway. “Taxation is one of the big dividing issues between the left and right sides, especially the wealth tax,” says Erna Solberg, former prime minister and leader of the Conservatives.
Sylvi Listhaug, her main rival to become a centre-right prime minister as leader of the populist Progress party, adds: “It’s one of the most important things for Norway in the future: we have to make wealth creation attractive. We should be a country like Switzerland that attracts people, resources, competences. Instead, we’re a country that sends away people.”
The fierce debate is likely to be closely watched across Europe where wealth taxes are attracting more interest, especially in the UK where some in the governing Labour party would like to see one.
Norway shows that a wealth tax is certainly viable, but that it risks being subject to huge political pressure from upset business people. Its impact on business life is more debatable but Norway’s lack of high-profile start-ups — unlike neighbouring Sweden, which abolished its wealth tax in 2007 — certainly stands out.
The list of high-profile fleers of wealth taxes is extensive. Ingvar Kamprad, who founded Ikea as a teenager in rural Sweden, left his homeland in the 1970s in protest at various taxes, ending up in Switzerland. He only returned to Sweden four decades later just before his death, and crucially after the wealth tax was cut.
John Fredriksen, the legendary shipping billionaire, is another, showing how entrepreneurs moving for tax purposes can be forced to do so many times if they stick to their logic. He left his homeland of Norway in 1978, eventually becoming a Cypriot citizen based in London.
But he has now left the UK in apoplexy, moving to the United Arab Emirates. He said earlier this year: “Britain has gone to hell, like Norway.”
Even those Norwegians now ensconced in Lucerne or Lugano in Switzerland have had nervous moments. A referendum will be held in November on imposing a high inheritance tax on the richest people in Switzerland.
Norway’s wealth tax imposes a levy of 1 or 1.1 per cent on all fortunes higher than NKr1.76mn ($170,000) but offers a range of discounts, especially for property. Debt is able to be offset against assets.
The current Labour government in Oslo argues that it is important the rich contribute to the country’s generous welfare state, and point out that were the wealth tax abolished, some of the wealthiest people would pay no tax at all. Indeed, in the top 10 list of the richest taxpayers in Norway in 2023, three of them had no income.
Gustav Magnar Witzøe, whose father made him the main shareholder of the fishing company SalMar at the age of 18, topped the list with a fortune of NKr30bn ($3bn) and paid NKr330mn in wealth tax in 2023. But he has no declared income. In 2021, he said the wealth tax forced entrepreneurs to pay themselves dividends from their companies to pay the levy.
Worst affected are early but promising start-ups. In 2022, the FT revealed that Fredrik Haga, the founder of a rare Norwegian start-up valued at more than $1bn, was moving to Switzerland as he would have to pay wealth tax on the “paper” valuation of his cryptocurrency data business despite it being lossmaking and not paying dividends. Haga, whose situation was debated this month by all Norwegian party leaders, says today that the situation is even worse. “I hope at least Norway can be a cautionary tale for other countries for how much of a self-inflicted wound taxing unrealised gains can cause,” he adds.
Norway’s election remains too close to call. The star power of Jens Stoltenberg, the former head of Nato who is now finance minister, appears to have given the centre-left an edge. He has called for a review of all Norwegian taxes, including wealth, after the September 8 vote. Many of the richest people across Europe will be paying attention.
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