Submitted by: Lena Hansen

Many countries have some sort of welfare system, but not many are as developed and complex as the welfare systems in the Nordic countries. The Nordic countries include Denmark, Finland, Iceland, Norway and Sweden. Even though there are many similarities between these countries, there are still many differences in how each and every country run it. Norway for example, has a higher level of income compared to the other Nordic countries and are enjoying one of the highest income per capita in the world. Many Norwegian in general have high income an big fortunes where it is possible to collect a certain amount of tax.

1. High level tax rates

The Norwegian tax system indirectly pays for the welfare system, that includes schools, hospitals, unemployment subsidies and public sector in general. If Norway wished to maintain this welfare system, a high level tax rate is needed to continue to financial fund it. Percentage of the income in comparison to other countries are high, normally up 40-45% of ones income.

One advantage that Norway had before was the lack of property tax, but now each county can decide of their residents should pay it or not. Property tax is a matter for each and every municipality in the country. It is not a matter for the state in general but rather local governance.

2. Wealth tax

Wealth tax is a tax for those people with a high fortune compared to their income or wages. This is additionally to the other taxes already mentioned. This also includes housing, cash, bank deposits and money funds.

This is a method to get those with high income and a large fortune to contribute with taxes to the less fortunate in the society. Some compare it to a Robin Hood complex, take from the rich and give to the less fortunate. Which is not a correct description, but more a metaphor.

3. Unemployment subsidies and disability pension

Unemployment subsides is a social benefit that people receive if they have been unwillingly fired from their work. People how receive this benefit is entitled to receive it for two years. How much you will receive is calculated from incomes from previous years and cannot exceed 66% of the average income calculated or a maximum of 66% of 1.5G, which is equal to around 560 000NOK (yearly salary).

Disability pension or subsides is a monthly payment from the welfare system that ensures that people that are not fit or able to keep a regular job are provided with a monthly income, though not very high income, it is still enough to live by.

4. Child support including maternity leave

There are several types of child support offered in Norway, which includes maternity leave for both the mother and the father. Maternity leave in Norway usually last for 12 months. The mother gets maternity leave 3 weeks before the due date and of the 12 month she is entitled to at least 3, the rest can be shared between the mother and father. In addition to this the father gets two weeks after the birth and 10 weeks later on. The salary is paid by the welfare system, if 12 months is chosen the payment is 80% of the total income, if the leave is 10 months the payment is 100%. There are also other ways to decide the maternity leave between the mother and the father.

Every family in Norway with children up to the age of 18 are entitled to a flat fare child support amount each month. It doesnt matter what your income or fortune is, everyone gets the same flat fare, around 1000 NOK a month. To even out social differences between single-parent households and families with two parent households and income, single-parents get extra child fare, one extra child fare included each month. An example can be a single parent with two children, but she/he receives childe fare for three children.

5. Publicly founded welfare system

Norwegian also have a guaranteed pension once they retire. The retirement age in Norway is 67, but is allowed to work until 70 years old. However, the Norwegian Government are working on changing the retirement age to 70 or 72. The system provides people with a basic pension which is 66% of his/her previous income. The second pension option in Norway is a combination of the guaranteed pension and privately invested pension. The second option is the most common in Norway these days, mostly because the first model is too expensive in todays society and may not cover all living expenses.

All this is a result of the Nordic welfare system that Norway and the other Nordic countries are using. This is a combination of strong state management combined with private sector to give the best possible welfare for each and every citizen.

About the Author: Accounting, financial statements, tax settlement and general economic consulting for other companies.

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Source:

isnare.com

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