Forget About Switzerland. Finnmark Can Become the Next Tax Haven.

Les på norsk.

But first, a geopolitical backdrop for our international readers:

Norway shares a border with Russia in the north. From Finnmark, only a short walk and a currently impenetrable border station separates Norway and Russia. From Ukraine, drones are currently being fired at this part of Russia, while Russian fighter jets are taking off, heading toward Ukraine just beyond the Norwegian border.

You've heard this before

The Norwegian government has decided that people must live in this part of the country. The local communities must be robust, a clichè becoming just as empty as the term "sustainability." 

"Without people, no security policy," the government members often state when they visit the North.

Or talk about the North.

The demographic development of the High North begs to differ. If we look at Northern Norway under one, the relative population share will have decreased from ten to about seven percent in a few decades. The population decline has been quickest in Finnmark.

Numerous measures have been implemented to turn the development around. Perhaps some have worked. It is difficult to calculate the effect of these measures as long as the target, population growth, has not been met.

The effect of free childcare, one of the latest national proposals, was quickly devoured by the rest of the country, receiving virtually the same offer. One of the newest local proposals made by the mayor is to tear down Russian street signs in Kirkenes. He admittedly regretted this afterward, but the measure illustrates a year-long patchwork of random, little thought-through solutions that neither change the demography nor create unity.

Stop the Chinese

A local initiative to open the geopolitical strategic port in Kirkenes to Chinese companies was effectively shut down by the government as late as today due to security policy reasons. 

The state has consistently insisted that it knows best and better than the inhabitants and the business sector regarding which solutions will work. The statistics show that this is incorrect. Thus, one of the most important public "contributions" to the North, particularly Finnmark, are commuters that fetch their paycheck in the North but pay taxes in the South.

Back in 2019, I suggested examining reduced income tax as a measure for what was already a crisis. At a time when everything that happens in the North is analyzed from a security policy perspective, the issue is bigger than ever.

The Finnmark County Council is now trying to do something about this by announcing a tender to calculate the effect of a separate and lower Finnmark tax. 

The tender was won by the Center for Economic Research at NTNU, which is now calculating the effect of a separate Finnmark tax of the order of eight percent. 

The proposal derives arguments from public studies, among others, which state that the situation in the North is already dire and that something needs to be done.

Therefore, the Finnmark County Council wants a professional assessment that will, among other things, "provide socio-economic perspectives on and recommendations for the most significant tax and levy-related measures that can be considered to ensure population business growth in Finnmark."

The Chair of the County Government, Hans-Javob Bønå, is in many ways fighting a battle against gravity as he insists that it is possible to reach a population figure of 100,000 in Finnmark. He made this claim most recently at the Link conference in Alta this week.

Yet, he has gathered a cross-political majority to find the answer to what a lower tax would cost and what it could mean.

Couldn't be better

The timing could not have been better. We are in the midst of a security policy-challenging situation in which we simply cannot lose more people from the North to the South. This should open doors for any political party that wishes to turn the development around.

Giving the population of the North direct financial incentives can prove to be a far more effective measure than letting the state dictate the needs and desires of each individual.

This could trigger innovation and investments and is quite different from offering childless people free childcare or free ferry rides for RV tourists.

Provisional calculations made internally in Finnmark show that implementing a tax of about eight percent would cost between NOK 3,1 and 3,4 billion. That would be a low price to pay for Norway's and Europe's security if the measure affected population figures.

The entire Northern Norway

In the long term, such models should be considered for the entirety of Northern Norway. Considering the current security policy situation, it is easy to argue that other solutions are needed in the North than the rest of the country. 

NTNU's deadline for presenting its calculations is November 1st.

At a time when most people are concerned with Norwegians moving to Switzerland, this could trigger a new and different debate about migration flow toward the North.