Torbjørn Sven Stokke
I don’t think Ropstad should go to bed with a broken back without someone picking up the pen for his defense.
This is a discussion post. Opinions in the text are the responsibility of the writer.
This fall, the Storting’s commuter housing has been a hot topic. In the middle of the dispute is the former leader of Krf Kjell Ingfolf Ropstad and any tax liability because he did not pay the parents anything to live in his house.
The case has several ethical aspects. I will not go into these in more detail. I limit myself to tax legal aspects. I don’t think Ropstad should go to bed with a broken back without someone picking up the pen for his defense.
No change since 1927
Until 2019, the employee had to be entitled to a deduction for the employer to cover the expenses tax-free. The arrangement has remained relatively unchanged since 1927.
A deduction must be made for the additional costs that the employee has to live away from home. Here are not the requirements set by the Tax Administration that the person must have costs related to the home.
The bill was introduced in 1926. At that time, the Ministry of Finance is said to have declared that no deduction for expenses will be applied to people whose stay in the workplace does not result in an increase in expenses.
This is especially true for “loose and unemployed” people without a permanent home in any district. This is because the cost in one location will not be more expensive than the other.
In addition, it is written that single people with a permanent home may receive additional deductible costs for stays in another district. For breadwinners, no further conditions are elaborated.
Based on these statements, a long-standing practice has emerged in which single travelers must pay the costs of the original home in order to receive a deduction.
What about family travelers?
For family travelers, I have not been able to find any tax assessment practices that indicate that there must be costs at the place of residence, other than that this house must not be rented. The house that is defined as the place of residence will determine if you can get a commute deduction.
For family travelers, it is basically the house in which you live with the family, which is the place of residence. If it is the home in the workplace that is considered a place to live, you will not receive a deduction.
If you want to get a deduction, your place of residence must be in another home. Therefore, it is natural that there is no requirement for original housing costs for family travelers.
In my opinion, the parliamentary representatives cannot be compared with the “loose and vacant”. Here are two residences. It is also defined in the law where they must have their place of residence and affiliation. In any case, Storting representatives who consider themselves family travelers will be excluded from this practice.
We must understand the comments of the Tax Administration in the case so that it believes that it applies to a principle that original costs must be had to have an additional cost. If understood correctly, it can hardly be correct. There are several tax rules that do not make such a claim.
New rule on tax exemption from 2019
In 2019, we received a new tax exemption provision for employer coverage of costs of living outside the home. From this moment on, the necessary symmetry between the deduction and the tax obligation ceases.
In-kind benefits (benefits that an employee receives differently from his employer’s money) on employment are normally taxable, but this provision limits the tax liability. Like other rules, this provision must also be interpreted to understand the meaning. The wording weighs heavily on such an interpretation.
The Storting representatives will hardly take this case to court.
It is not a fact that the practice related to a deduction rule applies directly to the understanding of a clearly worded tax exemption provision. This applies even more to family travelers, as the practice only applies to single people.
The principle of legality
The principle of legality (“without punishment without law”) requires a clear authority to be able to impose obligations, including tax. The principle of legality has several justifications, but the consideration of predictability and prevention of the arbitrary use of force is fundamental.
The principle of legality is probably no weaker when interpreting a tax exemption provision than when interpreting the duty provision itself. Here too there is a clear need for predictability.
There is something to which this case clearly testifies. In this case, such a clear legal basis is lacking.
Just to court
The Storting representatives will hardly take this case to court. The drop height is too great for that. Nor is the Storting administration likely to take the matter further. Therefore, it is unlikely that we will obtain a court decision in the case.
We must trust that an investigation will be initiated, so that the interpretation of the tax administration can be followed.
An investigation will not solve everything. There is an over-mature need for new and clearer regulations, so that everyone, including our representatives in the Storting, can be assured of predictability.