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Thursday, September 5, 2013

The Cost of Living the High Life

Norway is a pretty wealthy nation.

Based on last year's end-of-year numbers, it ranks in the top 5, globally, in both Purchasing Power Parity and Nominal GDP (both rankings are in terms of "per capita", an important distinction to make.  In terms of "gross", Norway doesn't rank in the top 20).  The abundance of riches are not just limited to monetary units, as Norway is rated as the global leader in human development (a seemingly unquantifiable thing to measure, but the process the UNDP uses is addressed, at length, via the link I've provided).

Not only does Norway create a conducive situation for their own citizens, they extend a helping hand to developing nations around the world as the globe's second-largest foreign aid contributor, in terms of percentage of GDP.  Also, while the number is in decline, Norway is the world's, 13th largest recipient of asylum seekers.

What does this mean in day-to-day life?

Norway is second-globally in wages and, while the citizens enjoy a plethora of upscale cars, multiple homes, and jet-setting vacations, Norway has one of the largest, maximum, personal income tax rates in the world.  If one were to read the Government's 2011 Tax Report such phrases that would be heresy in my native country are present, for example:  "redistribution of wealth", "fair tax system", and "plans to increase the pension income social security contribution" (there are a few, familiar phrases such as "90% of the equity is owned by 10%").
Puffy would probably not enjoy Norway
Taxes, like death, are unavoidable and profitable ($36 billion in Norway in 2010), but where the average person really feels the pinch is on the VAT.  Value Added Tax is basically a punishment for balling that only effects the buyer.  It isn't a godless, euro concept, it is present everywhere.  Even in America.  The US' version of VAT is the reason why gas and cigarette prices vary so much from state-to-state (well, partially the reason).  The main difference in how VAT is used in Europe (specifically in Scandinavia) on more products and with a higher rate of pay.

For food, there's a 15% rate and a variety of transportation, hotels, and entertainment come with a 8% rate.  While that seems hard to keep up with, it's nothing compared to alcohol.

A 12-pack of 12 oz (.355 liter) Sierra Nevada or Samuel Adams costs $14 on the east coast, but a six pack of half-liter (16.9 oz) Tuborg costs $25 in Norway.  There's a 25% VAT on alcohol + 5 kroner ($0.90) per can environmental VAT + 1 kroner pant ($0.17) per can.  Additionally, on wine, there's 4 kroners for every percent of alcohol (13% alcohol = 52 kroners/$8); on spirits, the cost rises to 6 kroners for every percent (40% alcohol = 240 kroners/$40).  This is before you factor in the soon to go into effect 5% increase in alcohol tax.

You have to pay the cost to be the boss.


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