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Privacy, what privacy? Many Nordic tax records are a phone call away
April 12, 2016 / 3:41 PM / in 2 years

Privacy, what privacy? Many Nordic tax records are a phone call away

OSLO/STOCKHOLM (Reuters) - When top earners’ tax returns are published in Finland, they call it “national envy day”. In Sweden, one phone call will get you your lawmaker’s tax bill. Norwegians’ fascination with each others’ taxes has been labeled “financial porn”.

The Royal Palace is seen at the end of Karl Johans Gate in Oslo, Norway, in this December 11, 2012 file photo. REUTERS/Suzanne Plunkett/Files

While the Panama Papers have forced British politicians to reveal tax details that are traditionally kept private, and U.S. presidential candidates are under pressure to do likewise, most Nordic citizens’ tax returns are freely available.

Every November, Finnish media publish the names of about 10,000 of the country’s biggest earners, plus hundreds of celebrities and sports stars, making headlines with top 10 lists of the biggest tax payers.

Two years ago, Ilkka Paananen and Mikko Kodisoja, founders of “Clash of Clans” mobile game maker Supercell, were revealed each to have paid 54 million euros in income and capital gains taxes, breaking the Finnish record for annual tax payments.

Norway has published tax returns since 1863, when they were posted on town hall walls. For decades, anyone could request tax data anonymously, leading to worries its people were too obsessed with who was paying what.

Tax openness sometimes brings surprises. Media reported that Norway’s top earner in 2014 was the relatively unknown Einar Aas, an electric power trader and investor, with an income of 501 million Norwegian crowns ($61.10 million).

Worries that anonymous enquiries could be used to tip off burglars have prompted a tightening of the rules since Norway’s right-wing government took office in 2013, so that anyone whose name is targeted is now informed about who is searching.

That has led to a tumble in the number of searches of tax records, to 2.15 million since the last batch became available in October from 16.5 million in the 12 months to October 2014, the last year the system was anonymous.

Norway has a population of 5 million.

SNOOPING AT WORK

Many Scandinavians use openness on taxes to estimate salaries of co-employees, helping with wage negotiations.

”I think it’s a good idea,” said Tonje, waiting for a train at Oslo’s main station. She declined to give her full name, saying she did not want people to know of her snooping.

“I could check on people who work in the firm in the type of job I‘m seeking to see what they earn. Now it’s got a lot harder,” she said, referring to the ban on anonymous searches.

A general view shows Stockholm, Sweden, in this January 17, 2013 file photo. REUTERS/Ints Kalnins/Files

In Sweden, a single anonymous telephone call to the tax authority is enough to find out what someone has paid. Almost all income tax details are public and Swedish tabloids often publish lists of the highest earners in different neighborhoods, and who paid the most tax each year.

These policies are rooted in cultural traditions. The Swedish concept of the “law of jante”, which means no one is special or should stand out, underscores how individuals can threaten the Nordic region’s core collectivism.

In Sweden, whose system of cradle-to-grave welfare paid for by high taxes relies on voters’ faith in its fairness, the tax agency consistently polls as the most respected state institution.

“Trust is the foundation for Scandinavian openness about taxes,” said Gert Tinggard Svendsen, political science professor at Aarhus University in Denmark.

“The welfare systems we have in Norway, Sweden and Denmark are basically a collective insurance ... you trust that all the other people will work and pay taxes. That trust in other people gets an extreme expression in the publication of taxes.”

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He said surveys show Scandinavians top international rankings for expressing trust in other people.

“It is obvious that openness is significant,” said Stein Reegard, chief economist of the Norwegian Confederation of Trades Unions. “At least for a better-informed public debate about the different levels of wages in society, whether it’s a question of leaders’ wages or equal pay.”

But the evidence is unclear and OECD economist Herwig Immervoll said there was no obvious correlation between income transparency and pay disparities. A 2015 Eurostat report showed a gender pay gap of around 15 percent in Sweden and nearly 19 percent in Finland, compared to an EU average of just over 16 percent.

Some Scandinavians think sheer nosiness underlies the candor about tax.

“This is the Finnish way, but I don’t know who benefits from it, expect for the media.” said Tero Honkavaara, chief tax policy adviser at business lobby EK. “I’d question, do I need to know about my colleagues’ and neighbors’ income, or whether this only stokes curiosity and envy?”

Ironically, Denmark -- where tax records are not public -- is the one Scandinavian country where politicians’ taxes have caused controversy. Then Prime Minister Helle Thorning-Schmidt was forced to admit in 2010 she had made “big and sloppy mistakes” when records were published by a tabloid showing she was not eligible to tax deductions on her Copenhagen residence.

For the rest of the Nordics, openness is here to stay, though few expect countries like Britain to follow.

“It think it is very difficult to translate the Swedish tax return openness to other countries,” said Janerik Larsson, a senior advisor at Prime PR company and a newspaper columnist.

“Sweden is a small country and our tradition of high trust is probably impossible to export.”

Additional reporting by Tuomas Forsell in Helsinki; Johan Ahlander and Johan Sennero in Stockholm; Jacob Gronholt-Pedersen; Editing by Catherine Evans

Our Standards:The Thomson Reuters Trust Principles.
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