The Ministry of Finance’s consultation memo on the economic rent tax, which was published 28 September 2022, is very flawed. The proposal for economic rent tax has already produced a wide range of consequences that are not described in the report, and new consequences are constantly being pointed out that will arise if the proposed proposal is implemented.
The question that we want to address in this article is how the Government can deal with the matter in spring 2023 to ensure that the economic rent tax is properly investigated. In my opinion, the shortcomings of the report cannot be “repaired” through the consultation process that was carried out until the consultation deadline of 4 January 2023. If the Government wants to put forward a proposal for economic rent tax after the consultation, the proposal has to go through a new consultation round. That is the only way to rectify the flaws in the Ministry of Finance’s consultation memo.
The Instructions for official studies and reports, which determine the requirements for investigations into state regulatory measures, state in item 3-3 fourth paragraph:
“If the consultation statements or other circumstances lead to significant changes in the proposal, the revised proposal shall be sent to a new consultation.”
If the Government, after reviewing the consultation statements, wants to propose significant changes to the regulations that have been submitted for consultation, the case shall be sent to a new consultation round. It will be a breach of the instructions if the Government presents a legislative proposal to the Storting with a different content than the consultation proposal – without this being sent for consultation to the industry and society first.
This provision in item 3-3 of the instructions prerequires that the proposal that was first sent for consultation fulfils the instructions. That means that the consultation memo contains, among other things, a comprehensive description of the measure’s positive and negative effects on private and public business activities – as appears from Section 2-1 of the instructions. When the consultation memo does not contain such a description, the obligation to send a new proposal for consultation will be more extensive than what follows from item 3-3 fourth paragraph.
In the situation we now find ourselves in, a new consultation round will, in my opinion, be required anyway, if the Government wants to put forward a proposal on economic rent tax after having reviewed the consultation statements. The consequence of the Ministry of Finance’s consultation memo being so inadequate is that the consultation statements will naturally focus on correcting the inadequacies. Most of the statements will place great emphasis on explaining to the Ministry of Finance and the Government what consequences the proposed economic rent tax will have. In this way, an important effect of this consultation round will be that it enables the Ministry of Finance and the Government to write a consultation memo that fulfils the requirements of the instructions.
However, the purpose of a new consultation round is not that it should contribute to providing an acceptable case investigation. When the consultation memo is as inadequate as in this case, it becomes very difficult for the Government and the Ministry of Finance to assess what are party submissions in the consultation memo and what are factual corrections or supplements to the content of the consultation memo. In order for the case investigation to be sound, the Ministry of Finance and the Government must therefore first review the consultation statements and then prepare a new consultation memo that carries out a case investigation that fulfils Section 2-1 of the instructions. And then a new consultation round must be carried out where the industry puts forward its views so that the case is broadly and factually clarified. Then, the Ministry of Finance can assess whether a legislative proposal should be submitted to the Storting and what this proposal should contain.
The economic rent tax this autumn has clearly shown that the question of creating an economic rent for the aquaculture industry is complicated, and that it must be thoroughly thought through before it is presented and potentially implemented. In addition, it has shown how important this case is for Norwegian coastal communities. If the Government is to act in line with its own instructions, it is required that the introduction of the new economic rent tax is postponed. This is necessary because a new round of consultations must be carried out after the Ministry of Finance has reviewed the consultation statements received and prepared a new consultation memo that meets the requirements of the instructions.