The Income Equalization System among Municipalities in Norway: Strengths and Implications

Abstract

Norway is a leading nation pursuing egalitarian public policies. With an aim to smooth out income differences between municipalities and to stabilize individual municipality's revenue over time, Norway has implemented a scheme called the income equalization system among municipalities. The scheme, which transfers revenue to poor municipalities, helps to maintain similar welfare services in all municipalities. We present and illustrate the model with data from all municipalities in Norway. We also demonstrate how the scheme helps stabilize tax revenue across municipalities over time. Furthermore, we show how the scheme can cause poor municipalities to have reduced incentives to increase their tax revenue.

The Role of Expectation Management in Value Creation: A Case Study on Municipal Managers’ Experiences with Offering Supported Housing

“…On average, it is the second-largest municipal health and care service field measured by expenditure, often comprising up to 20% of the municipal health and social budget (Sunde 2017). Municipal health and care services are funded partly by the municipalities' taxing base and equalized and somewhat caped through the intergovernmental income transfer system, which is comprised of a set of schemes and grants (Fiva et al 2014;Idsø et al 2018;Helsedirektoratet 2021Helsedirektoratet , 2022bHelsedirektoratet , 2022a.…”