Wealth Taxes and a $2 Trillion Fund: An Investor Guide to Norway’s Election

(Bloomberg) --

Controversial tax hikes on the rich, oil and gas drilling and how the world’s biggest sovereign wealth fund invests its money could all be shaken up by the outcome of Norway’s elections on Monday.

Labor Prime Minister Jonas Gahr Store is bidding to retain power in what is likely to be a tight contest. He’s leading in polls after a turnaround this year following the return to government of former NATO head Jens Stoltenberg. He’s also benefited from what’s seen as a rally-around-the-flag effect related to geopolitical uncertainty and tensions with President Donald Trump’s administration. 

But he’s been criticized by the country’s business lobby and right-wing opposition forces for wealth taxes that they say are damaging to businesses and the economy. 

With the Conservative Party of ex-premier Erna Solberg polling at its lowest since the financial crisis, Store views the populist Progress Party and its leader Sylvi Listhaug as his biggest rival. 

Store currently leads a minority government after his coalition partner, the Center Party, quit in January. Labor may try to continue to rule alone after the election, with the support of smaller left-wing parties.

Voting is scheduled to close at 9 p.m. Monday. Here’s a look at the sectors and assets that could be most impacted by the election:  

Wealth Taxes

The government’s tax measures in recent years — which it says are intended to close loopholes and reduce inequality — include higher levies on wealth and dividends. The moves have prompted as many as 500 of the country’s richest to leave, according to estimates from DNB Bank ASA.

In addition, scores of startup entrepreneurs are mulling a move or choosing to hire outside Norway since a rule change last year on exit taxes on capital gains. A similar trend has been playing out across Europe. 

The Progress Party says it would scrap the wealth tax, now as high as 1.1% on fortunes exceeding 20 million kroner ($2 million). The Conservatives together with two smaller right-leaning parties have pledged a partial removal, on shares and fixed assets. 

Store’s cabinet has argued that investment hasn’t been affected and that cutting wealth tax rates would leave a budget hole that would need to be filled by alternative levies on businesses.

Economic growth, excluding the offshore energy industry, is forecast to accelerate to 1.6% this year from 0.6% in 2024.

The country’s benchmark stock index has risen about 14% so far in 2025, outperforming Europe’s Stoxx 600.

Fund Investments

Both Progress and the Conservatives have pledged to open the door for Norway’s $2 trillion sovereign wealth fund to invest in companies involved in the nuclear arms industry, such as BAE Systems Plc, Airbus SE and Safran SA, which are currently excluded on ethical grounds.

They want to end current restrictions as European countries ramp up defense spending in response to Russia’s war against Ukraine and shifting US security support.

The fund has also become entangled in controversy with the US. It recently divested a number of Israeli firms over their links to the war in Gaza, and also removed Caterpillar Inc., prompting a backlash from Republican Senator Lindsey Graham.

Energy Policy

There is consensus among the biggest parties that Norway should be drilling for more oil and gas, to slow the decline of the country’s hydrocarbon resource base and ensure energy security. Store’s Labor is among those favoring more exploration, but the smaller parties it may have to partner with for support are pushing for a swifter wind down of the sector.

In the meantime, there are efforts to reduce the environmental impact of the industry.

Producers have invested in subsea power cables to offshore platforms, helping to cut emissions from fossil fuel production and edging Norway closer to meeting global climate targets.

A major project is the electrification of Europe’s biggest liquefied natural gas production facility in Hammerfest, operated by Equinor ASA above the Arctic Circle. Here, electricity drawn from wind and water will replace natural gas turbines that emitted about 2% of the country’s carbon dioxide last year.

Opponents, including Progress, argue that the arrangement will drive up power prices in a sparsely populated area that has typically enjoyed some of the country’s cheapest electricity. A policy reversal would likely cost Equinor money, force Norway to look for other paths for achieving climate goals and also raise questions about further development of fields in the Barents Sea.

Budget Funding

Any incoming coalition is unlikely to significantly change the rules governing the wealth fund’s contributions to the state. About 20% of the budget now comes from the fund’s returns, and there is even some room to spare. Spending this year is planned to be at 2.7% of the fund versus a 3% limit under a fiscal rule. 

Both Progress and the Conservatives have pledged to reduce public spending, but analysts expect expansive budget policies to continue in coming years under any party. 

The Norges Bank cut its main deposit rate to 4.25% in June and is expected to do so again this month. The krone has weakened more than 2% against the euro since the June move.

©2025 Bloomberg L.P.