The government continues the additional employer contribution, but raises the maximum by NOK 100,000. Now the FxARK architectural office has to make ends meet.
– We were a bit optimistic here yesterday, after the budget leaks came, and there were rumors that the tipping point would be raised to 1 million kroner. It would have done a little more.
But General Manager Eva Sjo and Finance Director Mariel Ch. Fjell at architecture firm FxARK had to mention this on Friday morning The employer contribution will generally continue.
Vidom and the government propose to raise the tipping point from NOK 750,000 to NOK 850,000. This means that income above this amount will receive an extraordinary tax on the employer.
According to the Minister of Finance, this is part of the reduced tax burden that will appear in this year’s budget. It was also mentioned on Friday that the fees will Phasing out.
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– It is positive that the fees are gradually being abolished, and that the free amount is increased for the year 2024. But we are disappointed that it has not been completely abolished. It was supposed to be temporary, say the directors of the small architectural firm.
Meanwhile, they note that nothing has been reported about when the surcharge will actually disappear.
-Describing the change as “beginning to phase out” I think suggests that the scheme may continue for a long time. It should have been stopped, Fjell says.
– How much did it affect you when they imposed this tax?
– It becomes very important for us now at the end of the year, when salaries start to reach that turning point.
– For a small company like ours, where the profit margins are already very small, where we are not part of a larger mechanism and are very vulnerable, in extreme cases this can turn the company from profit to loss. Fjell says there will be no taxes from it.
– Increases risks
The architect’s office, based in a Swiss villa in Oslo’s Marinelist, has seven employees, all of whom play a crucial role in the company’s survival – and they say the margins are very small.
Fjell and Sjo say they think it’s strange that the tax isn’t linked to profitability.
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– It is not a tax on the profit, on the result you achieved. “For me, it’s going to start at the wrong end,” Fagell says.
She thinks it would be fair to tax those who do well.
– Vidom talks about redistribution, the guiding principle in this state budget, which is that those who earn well should share the benefits with those who need them most, says Sijo.
– What happens with the employer tax here for small businesses like us is that it increases the risk of bankruptcy. Jobs lost. Loss of efficiency, Sajwi says.
FxARK is a continuation of Felix Arkitekter, which was started in 1997 by Norwegian-Chilean Felix Vidal. There were about 20 employees at most, whereas just before the pandemic it was 13-14 employees.
Like many others, this office also had to lay off workers and downsize. The increase in employer contributions comes at the height of a long period of difficult times.
We choose to be positive. We are seeing a slight uptrend now in the fall, but the signals from the industry are not good. There are bankruptcies in the construction industry weekly, if not more every week.
The office has an ongoing project where something is being built right now. Otherwise, there was a complete halt in project implementation.
– What we are seeing, fortunately, is an increasing number of requests for proposals. Although we don’t work much with projects in the construction phase currently, we invest a lot of resources in bidding for construction projects.
-We must maintain the experience we have. “Now we can’t become less, because then there will be no more work,” Sogo says.
– This is what I mean by that as a small business you are very vulnerable, because the profit margins are slim. If one of us gets sick, it’s difficult. If one of us resigned now, it would be critical, Fjell says.
The architectural industry is already being affected by layoffs and redundancies. At the beginning of September, news broke that Sweco Architects had to take a 30-year cut, according to the British newspaper the Daily Mail. arkitektur.no.
For FxARK, it is not appropriate to lay off anyone, because the workforce is what it makes money from, say Fjell and Sjue.
– Then we lose efficiency and lose experience. And there is no solution.
– Increasing the employer contribution is a purely punitive tax on higher education, experience, competence and specialization. Fjell says the focus should be on knowledge and innovation rather than taxing efficiency in an industry already under pressure.
They say they now hope SV will do something about the ceiling in budget negotiations. If not, it could become critical.
We must continuously develop and increase our efficiency so that we can keep pace with developments. Increased taxes on employers erode the amount we were willing to spend on skill development and competitive wages to keep our employees and their expertise and experience with the company, says Fegel.
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