Oil companies generate as much as ordinary Norwegians pay in taxes

Aug 1, 2006, 15:32 GMT

Oslo - Record-high oil and gas prices have pushed up earnings - and corporate taxes - for Norwegian energy companies Statoil and Norsk Hydro, reports said Tuesday.

The Bergens Tidende newspaper estimated that the two firms have paid 68.1 billion kroner (11 billion dollars) in corporate taxes during the first six months of this year.

In comparison, the government estimated it would generate 67.7 billion kroner (10.97 billion dollars) in income and wealth taxes from ordinary Norwegian citizens during the corresponding period, the newspaper said.

The flow of money from the oil industry is staggering. The government had estimated an oil price of 350 kroner (56 dollars) per barrel but during the six-month period it has almost been 417 kroner (67 dollars) per barrel.

If the trend continues, income from the oil sector this year will be 40 billion kroner (6.48 billion dollars) higher than estimated, totalling some 390 billion kroner (63.2 billion dollars).

That can be compared to the combined income of some 541 billion kroner (87 billion dollars) the government generates from taxes and fees including income tax, valued added tax, and taxes on tobacco, spirits and cars.

If the oil price hits 100 dollars a barrel, the oil sector alone would suffice to run the state expenditures, Bergens Tidende said.

That scenario however contains dangers including overheating the economy.