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Doubting there will be more families in Longyearbyen

"This will probably be a negative burden for Store Norske", Arild Olsen says. He is worried about the tax changes. FOTO: Eirik Palm

Doubting there will be more families in Longyearbyen

Union steward Arild Olsen at Store Norske is certain that changes in the tax rules will not lead to a more robust family community in Longyearbyen.

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06.10.2014 kl 14:36

Olsen said he is, to put it mildly, unhappy about the changes taking effect as of the new year.

"This will probably be a negative burden for Store Norske, which will make it ever harder for the company to get into plus territory. It will be harder to hold onto expertise, not to mention difficult to choose experts from the top shelf," Olsen said. He estimates the loss for current commuters when the new rules (see fact box) enter into force will be between 80,000 and 110,000 kroner a year.

Losing the carrot
Store Norske has no commuter arrangement, although many of the employees choose independently to do so. The company is one of several in Svalbard using rotation schedules. The shifts – which may consist of 14 days continuously at work and 14 days off, for example – can be difficult for many. However, such arrangements have their advantages.

"The carrot in a rotation system is long free periods, which one gets powerfully attached to. I believe in positive work measures. Forcing people to spend their free time here so that they will get the tax benefit, thus denying many to have the best possible contact with family and friends on the mainland, is not a positive measure," said Olsen, before drawing out a comparison.

"In many industries on the mainland, such as the oil industry, there are such rotation schedules. It would be absolutely unheard of to punish the employees in these industries by providing them with much higher taxes because they, in the authorities' opinion, do not use their free time appropriately."


'Outdated'
The intention behind the new tax rules, where the emphasis is placed on where an employee is physically at any time, is to further efforts making Longyearbyen conducive to being a stable family community. Olsen said he believes that is a totally outdated idea.

"The exemption arrangement has worked for so long that now it should be left as is," he said. "This started many, many years ago, and late gestation has led to many businesses that have had to rely on the arrangement remaining permanent."

"Also, the reasoning of the new arrangement is outdated," he said. "It does not relate at all to the fact that today we have a dynamic society. Before there was only one flight a week; now it's often two a day."


Not more inhabitants
Olsen is also a local politician for the Labor Party. With that hat on, he said he still doesn't envision new and stricter tax regulations for commuters having a positive effect.

"I find very hard to believe that, by making it harder to keep Svalbard's tax rate, it will provide the community in Longyearbyen a single more inhabitant, more children in school and kindergarten, or more sales in stores. It is not certain there will be fewer inhabitants, either. Family community also means that you have family on the mainland and some choose to live like this. That should be respected by the authorities," said Olsen, who said he is reasonably pessimistic the government will consider reversing the decision.

"Some of the problem is that the management of Store Norske has the opposite view, which makes it difficult to make any progress against the central government," he said.

Since Olsen's comments are based on predictions about the future, does he think he may discover he's wrong?

"No, I think not," he said.


Uncertain
Terje Aunevik, director of Svalbard Næringsforening, said he likes the intention of the rule changes that are coming, but he is uncertain if they will have any effect. He emphasized that he is expressing himself as a individual person and a business party, not on behalf of the industrial association he heads, which has not considered the matter.

"We could all wish for more permanent residents in Longyearbyen," he said. "But at the same time I see that this can cause it to become more difficult to recruit people to the companies, and that perhaps especially Store Norske's society is very dependent on that. In addition, we have occupational groups as pilots. The pressure on such labor is great and when they're not allowed to commute without a tax penalty it is likely that recruitment can be a problem."

"The effects are difficult to predict, although of course we all could wish for more people in Longyearbyen," Terje Aunevik said.

Facts

Three groups are currently entitled to Svalbard's tax rate:

1. People who have been established tax residency in Svalbard. This requires moving to Svalbard and remaining as a resident for more than a year. Subsequently, they must stay in Svalbard at least 183 days each year.

2. People who stay in Svalbard for at least 30 consecutive days receive the archipelago's tax rate on what they earn during their stay. Income from stays of shorter duration are taxed at the mainland rate.

3. People who work in shifts with stays in Svalbard of less than 30 days, such as shifts of 14/14, with their entire work period in Svalbard. This was originally an exemption introduced for helicopter personnel for rescue and emergency missions, due to the special requirements of work hours and safety. The exemption was also applicable to others who worked in shifts and their their free time on the mainland. The requirement was that their first stay in Svalbard needed to exceed 30 days.

As of Jan. 1, the exemption in paragraph three will lapse. The remaining eligibility rules will remain in effect.

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