Forget the housing tax proposal | DN
All subjects have their echo chambers, and in the socio-economic chamber the postulate that the home must be taxed like all other financial assets rings true. The reason is that too low housing taxation leads to overinvestment in housing at the expense of other, more productive investments.
Just before Christmas, we confirmed the sound in the echo chamber once again with the Torvik committee’s tax proposal. The housing tax must rise and be taxed in the same way as all other wealth benefits, was the message. They even recommend reintroducing distributional taxation of one’s own home.
Yes, housing taxation in Norway is moderate as in many other European countries. But there have been good reasons for that. Historically, this in Norway has been linked to geography and the absence of, among other things, serfdom under large agricultural properties. In the 1900s, the authorities wanted to stimulate ownership among ordinary people. First with the Land Act in the 1920s, which turned many into independent farmers. The side with the housing association model that created freehold owners in cities and towns.
In Norway, own housing therefore became the fourth leg of the welfare society, next to health, education and work.
The moderate housing taxation has served us well and serves us well. It provides a significantly more even distribution of wealth in society, while, according to a Swedish study, it stimulates both the line of work and economic productivity.
The model has also meant that in the last year we have been spared from the global “financialisation” of the housing sector: In contrast to our neighboring countries Sweden and Denmark, we in Norway have not had the fund sector which has bought up housing in search of returns in the age of low interest rates.
This is because it is because of the housing model that our housing portfolios have not been large enough to buy. We see the consequences reaching, with significant falls in the housing market in Sweden and Denmark, while the risk of such a scenario is much lower.
The Norwegian housing model therefore also ensures financial stability.
The Torvik committee is concerned about the tax favoring of home owners over renters. Here, the selection has forgotten the ability of the ownership line and the tax system to generate offers in the rental market, and hence keep rental prices down.
Over the last few decades, we have had a good selection of rental properties all over Norway. With higher taxes on secondary homes, we now see that the supply of rental homes is reduced, especially in Oslo, where the pressure is greatest. This is a combination with higher renters, and hence higher return requirements, will probably in the future lead to a significant growth in the rental price at the expense of the economically marginal groups in society.
We will therefore challenge the committee and the Ministry of Finance to empirically model how the rental price will develop with the tax on renting out part of one’s own home, as they propose. Here is just one answer: The offer will be drastically reduced, and the rental price will increase significantly at the expense of the weakest.
So it is certainly not the case that Norwegian housing taxation is without points for improvement, and we support the public Torvik committee in the proposal to remove the document tax. Not just because it hinders mobility in the labor market; The distributional effect of the document tax is also very unfortunate. Since those who move mostly are between 20 and 40 years old, this means that you do not pay a disproportionately large share of Norwegian property tax.
With the lending regulation’s requirement for equity, the document tax also functions as a special requirement for equity, which is confiscated by the state.
Our proposal has therefore been a tax change: Abolish the document tax and municipal property tax in exchange for higher and proper wealth taxation of housing. It is true to have low property taxation on ordinary homes, but at some point, when the home costs DKK 50, 100 or 200 million, then the home ceases to be a home. When homes in such price ranges are valued at a fraction due to the poor equal value system, it could undermine the entire Norwegian housing model.
It makes sense to tax subsidize home ownership to a certain point.
The social economist’s view of housing tax is a postulate, a mythology with a weak, empirical basis. And their main argument, the empowerment of capital for productive and innovative investment, has been refuted a number of times. The Capital Access Committee’s report documents that good ideas and projects have no problems with financing in Norway.
The consequences of the Torvik Committee’s tax proposal are increased class differences. This will result in much greater wealth inequality and lead to a massive redistribution of wealth in Norway from ordinary people to the richest.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We like to share our stuff using links that lead directly to our pages. Copying or other forms of use of all or part of the content can only be done with written permission or as permitted by law. For additional terms see her.