This is shown in the latest report by Thema Consultancy which KS is releasing today.
Borskran Mayor Robin Goss is from the Labor Party Forewarned Against the vastly increased tax on hydropower now adopted in the Storting.
The new report upsets him again.
– Everyone understands that we have to contribute in 2023, which will be a very difficult year. But we are concerned that this should not be a permanent transfer of funds from the municipalities to the government, he says.
About 220 Norwegian municipalities have hydroelectricity. Large city municipalities are many of the largest owners. The same is true of Telemark, where Porsgrunn and Skien are located.
– Our assets at Skagerak Energi are citizens’ savings. Kåss says that if this becomes a permanent arrangement, these savings will be moved from the municipality and Borskron citizens to the treasury and citizens throughout Norway.
– We think it’s unfair if you don’t change it when the situation improves, Ap Mayer says.
NOK 34 billion
The increased tax on hydropower now means a drastic shift of future revenue from municipalities to the state.
Helge Aide, Area Director for Community, Welfare and Democracy at KS, a welfare organization for municipalities, said.
– Thema Consulting has calculated that municipalities will lose NOK 34 billion – this is the present value of all future dividend payments, he notes in the report.
– If we annualize it and take as a starting point a year without high electricity prices like this year, we are talking about a revenue of less than NOK 1 billion for municipalities and municipal welfare services. Every year.
The revenue loss was attributed to Storting’s decision to increase the ground rent tax on hydropower from 37 to 45 percent.
– Why are companies devalued?
– When you have to pay more tax, you have to pay it based on the capital of the companies. As capital decreases accordingly, the basis for paying dividends also decreases, says Ede.
– As the total value of the companies includes some debt, the value of equity is further reduced. It is the stock that provides the basis for paying dividends to municipalities in the future.
Land rent is practically a tax levied on the power industry and other industries as they are allowed to exploit natural resources.
The purpose of the tax tightening adopted by Storting is to increase revenue for the state by tens of billions at a time when spending is increasing.
Fiscal politician Geir Pollestad (Sp) says the tax hike “requires funds in budgets so we have to take some action”.
– NOK 34 billion in lost future revenue for municipalities, is that too much money?
– At the same time, municipal and publicly owned power plants will make good money in the future. They make good money today, Polstad says.
– We are very keen that they should be publicly owned and it should be more profitable for municipalities to own power plants. It will do, even if the taxes are somewhat adjusted.
In the report, different price scenarios are used as basis. But in all cases considered, the dividend payout was reduced by 30 percent.
The report estimates that if electricity prices remain at a more normal level in the coming years, the companies’ value will be reduced by NOK 70 billion.
– If half of that goes to dividends, it’s probably NOK 34 billion, which is the present value of a “small dividend” for municipalities in a normal price scenario for electricity, says KS’s Eide.
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