General government revenue and expenditure, 2005

The large increase in government revenue is mainly due to high oil prices that give a high income from petroleum activities. The increased petroleum related revenues are principally provided to the general government as operating profits from the State's Direct Financial Interest (SDFI) and as higher government tax revenue.

The central government receives tax revenues from all the subsoil extractors operating on the Norwegian continental shelf. SDFI, which is a part of the central government, does not pay taxes. The central government fiscal account show that the recorded figures for taxes on income and wealth from the extraction of petroleum amounted to NOK 165 billion in 2005. This is a growth of NOK 51 billion, or 45.1 per cent, compared with 2004 as the matching taxes amounted to NOK 114 billion. Accrued taxes from petroleum activities the first six months of the year are paid in October the same year, while accrued taxes for the activity the last six months are paid in April the next year. Consequently, in periods with increasing oil price and revenues from the petroleum activities, the accrued taxes will be higher than those recorded (see table 2). Both 2004 and 2005 show this pattern.

In addition to the petroleum taxes, the central government receives the surplus from SDFI's shares on the Norwegian continental shelf. The surplus is shown as withdrawals of income from central government enterprises in the central government fiscal account. The operating surplus at SDFI came to NOK 100 billion in 2005. This corresponds to a 29.7 per cent increase compared to 2004, when the surplus totalled NOK 77 billion.

General government's total expenditure raised from NOK 739 billion in 2004 to NOK 767 billion in 2005, a 3.7 per cent increase. Increase in pensions and wages constituted the major part of the increase. The general government surplus, measured by net lending, is in 2005 amounted to NOK 301 billion, an increase of NOK 100 billion compared with the previous year. The petroleum activity seen as a separate unit generated a surplus of more than NOK 300 billion. This calculation contains accrued taxes, transfers, interest and dividend plus other income and expenditure due to the petroleum sector.

Reduced deficit in local government

Total revenue in local government amounted to NOK 215 billion in 2005. This corresponds to an increase of 7.0 per cent compared with 2004. The increase in revenue is mainly due to a raise in tax revenue and transfers from central government. The total expenditure amounted to NOK 222 billion, an increase of 5.3 per cent from the year before. The major part of this growth is due to increased wages and salaries. A raise in transfers to the private sector can also be found, while investments are approximately the same as in 2004.

An increase in total revenue of NOK 14 billion combined with an increase in total expenditure of NOK 11 billion gave a lower deficit in local government. The deficit measured by net borrowing amounted to NOK 7 billion in 2005. This is an improvement of nearly NOK 3 billion compared with the year before. The local government saving, measured by current expenditure subtracted from current revenue, amounted to nearly NOK 2 billion. This figure was negative the two previous years.

The numbers are based on preliminary fiscal accounts from the local government, and must be interpreted with precaution.

A new release of General government fiscal account 2005, including expenditure by function (COFOG), will be available on 28 April 2006.