Prime Minister Jonas Gahr Støre insists there will be a salmon tax but adds:
Prime Minister Jonas Gahr Støre insists there will be a salmon tax but adds: "We will provide a system that values the fish based on what it is worth, the quality it has, the size it has."

Norway's government hints at change in 'salmon tax' structure

One-size-fits-all approach may be scrapped tomorrow

Publisert

Salmon and trout farmers in Norway are hoping that the government will announce a change in the way its proposed “resource” tax, or salmon tax, on the industry will be calculated tomorrow.

They blame the proposed valuation method of destroying the fixed-price market for fish, leading to more than 1,000 secondary processing workers being issued with lay-off notices.

Finance minister Trygve Slagsvold Vedum (Centre Party) and fisheries and oceans minister Bjørnar Skjæran (Labour Party) will meet with executives from Norway’s largest aquaculture companies tomorrow, and a press conference is planned after the meeting.

40% tax proposal

The background to the meeting is the government’s intention to impose a 40% tax on the value added to salmon and trout stocks during the time they spend growing to harvest size in Norway’s fjords.

That has caused salmon farming companies to freeze infrastructure investments worth billions of NOK and led to Norway’s biggest companies boycotting a government auction for permits to grow extra biomass.

But it is the way that the government plans to calculate the amount of earnings due for taxation that has reduced farmers’ desire for fixed-price contracts, and consequently caused problems for secondary processing plants in Norway.

The government proposes that income liable for the resource tax should be determined on tonnage assumed to be sold at a standard price - the NASDAQ index - which is the reported spot market price of some of the best salmon sold at the highest price out of Norway.

Variations in quality

But salmon vary in quality, and that can lower the price achieved. Using the NASDAQ as a tax-setting mechanism also adds risk to long-term contracts, which are often agreed at a lower price than the spot market. A business entering into a fixed-price contract therefore runs the risk of paying tax on a NASDAQ-priced income that is far higher than the actual income it has achieved.

In the worst case, a fixed-price agreement will be unprofitable overall, as there is a risk that the tax that will eventually have to paid will be higher than what was actually earn from the fixed-price agreement.

This is why farmers want actual prices applied to the taxation.

Scared of contracts

During the Norwegian Storting (Parliament) question time on Wednesday, Conservative leader Erna Solberg asked several questions in connection with the government’s proposal for the resource tax on aquaculture.

Solberg highlighted, among other things, that the farming companies do not dare to enter into long-term contracts because they do not know how the tax system will be, and what the basis for the tax will be. Among other things, the Conservative Party is against the base rate being calculated based on the standard price.

In response, Prime Minister Jonas Gahr Støre said: “We will provide a system that values the fish based on what it is worth, the quality it has, the size it has. The meeting we will have on Friday between the finance minister and the industry will clarify a good deal about that.”

Støre reiterated that there would be a resource tax on aquaculture, but that the proposal is being consulted on, and the government will listen to the feedback.