Democracy and Welfare Society

Economy

All employees pay tax. Most of the tax goes to the municipality where the employee lives, while a percentage goes to the county and federal government. Old age pensioners and those receiving unemployment and other benefits also pay tax. Companies pay tax to the federal government.

We also pay a duty tax to the government on all goods and most services that we purchase. This duty tax is called value-added tax (VAT). The normal VAT rate is 25 percent and 15 percent on food products. This means that part of what you pay for goods is tax that goes to the government. VAT is an important source of income for the government. More than 20 percent of the government’s total tax revenue originates from VAT.

A prerequisite for the functioning of the Norwegian welfare state is that as many inhabitants as possible are employed and therefore able to contribute to the system through tax payments. The revenues received by the government must be greater than its expenditures.

The government is responsible for part of the social benefits in Norwegian society, such as operating hospitals. But it is the responsibility of the municipalities to fund the largest percentage of social benefits.

Facts

Taxes and duties

  • The Norwegian welfare state is primarily financed through taxes and duties.
  • Income from taxes and duties is necessary to ensure enough money for social benefits and for the welfare state to function.

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