Norwegian Billionaires Attracted to Arctic Tax Haven
Mayor Sture Pedersen (Conservatives) wants to attract capital to Bø municipality through a reduction of municipal wealth tax.
“Public authorities abandoned us years ago, and all we have left is the private sector, which may save us”, says Mayor Sture Pedersen (Conservatives) of Bø municipality in Northern Norway.
Bø municipality in rural Vesterålen on the North Norwegian coast has had a negative population growth for years. In an attempt to counter this trend, the municipality council decided to lower the municipal wealth tax, hoping this would attract private businesses.
“We do this to attract capital to our municipality. We need that to survive and to create jobs”, says Mayor Sture Pedersen to High North News.
“Public authorities abandoned us years ago, and all we have left is the private sector, which may save us through creating activity in this municipality. And for that to happen, we need to take initiatives like this to draw attention.”
The initiative has already been successful. Kristian Adolfsen, one of the founders of the Adolfsen Group, has decided to move to Bø. The Adolfsen Group has some 24,000 employees and had a turnover of NOK 15 billion (€ 1.5 bn) in 2019.
“They have reduced the municipal wealth tax, which allows us to keep more of the capital in the company and continue growing instead of taking it out as dividends and paying wealth tax”, says Kristian Adolfsen to Nettavisen.
Hvor mange som melder flytting og hvor mye kapital som genereres i Bø av den nye formuesskatten får vi se i 2021, sier ordfører Sture Pedersen. Her fra Havna i Nykvåg, Bø kommune. Foto: Blue Elf / Wikimedia Commons
The Norwegian wealth tax is currently set at 0.85 percent. Out of this, 0.15 percent go to the state and 0.70 percent go to each municipality. The municipalities may set their own respective rates. Bø municipality has set its rate at 0.20 percent, so that the total wealth tax rate in Bø is 0.35 percent.
May create more activity in Northern Norway
Do you think more municipalities will do what you have done?
“I believe this is an initiative that may work particularly well in Northern Norway. We lack capital here. If we succeed, I do not think we will be alone in doing this. I want to see more activity in Bø, along the coast and in particular more activities in Northern Norway.”
“There is still more we can do when it comes to reducing wealth tax and there are other economic measures we can take in order to attract capital.”
How many people have announced that they are moving to Bø?
“We have had many inquiries from private businesses about establishing businesses in Bø. This is music to my ears. Some have come already; others are on their way. I cannot say right here and now how much this will amount to on the penny, however, when tax returns are ready in 2021, we will see the actual effect.”
Pedersen argues that a strengthened business sector also will improve public services.
“I have spent far too much energy throughout my political career trying to save state jobs that are long gone. I now rather spend my energy trying to attract private sector jobs. It is also far nicer to talk to them”, he says.
I have spent far too much energy throughout my political career trying to save state jobs that are long gone.
Northern Norway as tax haven
Owner and entrepreneur of T. Kolstad Properties, Tord Kolstad, believes a reduction of wealth taxes in Bø will have positive ripple effects for the municipality.
Tord Kolstad mener det er en god idè å gjøre Nord-Norge til et skatteparadis. Foto: T. Kolstad Eiendom
“One can see that the initiative taken by Bø municipality has given results. Several people have announced their moving to the municipality.”
“Tax income for Bø municipality will be reduced when the wealth tax rate is lowered, however, it will increase again once wealthy people move there. And if people with knowledge and capital move to the municipality, this is likely to lead to further creation of wealth.”
Is turning entire Northern Norway into a tax haven a way to go?
“Yes, I believe so. The region is facing challenges. The challenges may not be easy to see if you live in either Bodø or Tromsø, however, there are several challenges here. A tax-free Northern Norway would create vast stimuli for the Arctic economy. I believe this may be the solution to all problems Northern Norway is facing,” Kolstad says.
I believe this may be the solution to all problems Northern Norway is facing.
Would you move to Bø yourself?
“Based on tax considerations alone, I would not mind. I was there this summer and it is a great municipality. However, I have four under-aged children and they do not share my interest. I like Bodø and enjoy living here.”
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This article was originally published in Norwegian and has been translated by HNN's Elisabeth Bergquist.