NORWAY – A government-appointed committee has proposed that Norway simplify the taxation of pensioners in a wide-ranging set of proposals.

The Tax Committee, chaired by the chairman of the Norwegian Financial Services Association, Arne Skauge, has proposed changes that it says will affect the poor and pensioners. The committee was set up in January 2002 “to propose changes within the scope of an eight to 10 billion kroner (1.1-1.3 billion euro) net tax reduction”.

“The objective is to reduce average and marginal tax rates on lower range labour income, to make it more profitable to receive wages as opposed to welfare payments, as well as to simplify the structure of allowances and the taxation of pensioners,” says the committee.

“Within a largely revenue neutral framework, the Committee proposes simplifications to the taxation of pensioners, including the abolition of special age and disability allowances, as well as the abolition of the wealth supplement aspect of the tax limitation provision,” it adds.

For pensioners, the committee has proposed that special old age and disability allowance be abolished as well as changes to the tax shelter for low ordinary income and imputed income from net wealth to be abolished. It has also proposed that tax-free net income reduced to 76,400 krone for a single person and 124,700 for couples. It proposes that the tax rate for pensioners be cut to 50%.

Finance minister Per-Kristian Foss said he would consider the proposals. “We will continue to give priority to reducing direct and indirect taxes,” he says. The committee’s report will now be sent to interested parties, who will be invited to submit comments within three months. The government will submit a White Paper to the Norwegian parliament, or Storting during the autumn.

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