Environment sidelined in Norwegian budget

NGOs say plan to cut petrol taxes in combination with VAT on public transport is "catastrophic"

Environmental issues play little part in Norway's draft budget for 2001, which was presented by the government yesterday. The proposal includes a few increases in energy taxes - including a big jump in tax on heating fuel - but environmental groups have reacted with dismay to a plan to combine a small reduction in petrol tax with a new sales tax (VAT) on services, including a 12% rate on public transport but exempting airlines. One NGO described the likely effect on public transport as "catastrophic".

The contrast with last year's budget statement is striking. At that time the governing centre coalition said it aimed "to turn the tax and tariff system in a more environment-friendly direction by expanding existing environment taxes and imposing new ones". Five months later, that government became the first in the world to collapse over issues related to global warming (ENDS Daily 9 March).

Spending by the environment ministry will rise under the new budget by NKr80m (euros 9.9m), but after "technical adjustments" will show a proportional decrease from last year of 5.9%. The environment and oil-and-energy ministries will cooperate on a NKr20m pilot project to encourage more use of natural gas. The environment ministry says that environmental monitoring will be "a high priority". Up to NKr6m will be spent on studying and/or cleaning up polluted fjords and harbours.

Under the government's specific energy tax proposals, domestic electricity will rise by 1.5 øre (NKr0.015) per kilowatt hour, to 10.06 øre per kWh, while industrial consumers (previously exempt) will now pay 1 øre/kWh. A tax on fuel oil for heating will increase from 19.2 to 30.2 øre per litre.

Follow Up:
Norwegian finance ministry, tel: +47 22 24 41 00, and details of budget 2001.

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