Why is Scandinavia so expensive ?
Hi I am Deepjit Karmakar, founder of thecommercialinfo.com and today here in this article I am gonna tell you why Scandinavia is so expensive.
Across scandinavia, the average price of everything from a knitted pay roll neck pastries from the local bakery are some of the highest in the world.
Scandinavia is a region in Northern Europe that was a historical e made up of three kingdoms: Norway, Sweden and Denmark. They are United by their Viking heritage but also their shared reputation as one of the most expensive regions to live and visit. Whether it's buying a car or a TV. Consumers in Scandinavia pay some of the highest prices in the world. Even buying groceries is costly with all three countries' food and drink prices above the European average. All three countries also have a standard VAT rate of 25%. Amongst all the European Nations, only Hungary has a higher rate. Heading to the bar is also pretty pricey. In Norway, having a beer or glass of wine will cost in ×2.5 times the EU Average. Both Norway and Sweden have state-run monopolies on alcohol which helps keep the prices up. Desh social market, like in the U.S., is common across Scandinavia and helps explain why the cost of living is so high. Scandinavian countries have large welfare States with their social expenditures, as a percentage of GDP, among the highest in the world and this requires high levels of taxation. Sweden has a top rate of personal income tax off over 60%, while Denmark's is more than 55%, both of which are well above the OECD average. In Denmark if you want to buy a car you have to pay anywhere between 85% and one 150% tax on top of the cost of the vehicle. And the Texas don't stop there. Let's say I want to buy a sweater in Denmark. I pay 300 kronor for it, but how much of that money actually goes to the vendor? Well, first there's the 25% VAT-leaving the seller with 240 Kronor. The clothes shop also has to pay minimum 22% of corporate income tax. That means that a big portion of the money I paid for my sweater goes to the Danish government. Not to mention there's a hefty payroll tax on employees wages and the the store still has to pay for rent, electricity and cleaning all of which are taxed too. These taxes means that for Scandinavian businesses to mark a profit, they need to charge their consumers high prices. For some companies, this has proved too much of a burdan for their business model. The world's biggest furniture company IKEA was founded in Sweden but has moved its headquarters to the Netherlands. Through corporate restructuring, the business is now owned by a nonprofit Dutch parent company. In part due to the high taxes in Sweden. But according to some experts, Scandinavia's social democral tendencies have led to strong social cohession and has helped provide political stability. This, in turn, has made their economies safe havens for outside investors- which is one reason why the Denish,Swedish and Norwegian currency is called krona are so strong. This can be tough on tourists with the exchange rate doing them no favours.
If the cost of living in Scandinavia is so expensive, why then are its citizens some of the happiest in the world?
In the past 5 years, Scandinavian countries have regularly topped the world happiness report.
That's an index that measures overall life satisfaction based on different contributing factors. Some experts attribute these high satisfaction levels with scandinavia's large welfare State. Which they say ensures financial security, job security and economic distribution. In return for high taxes citizens get free state education, very cheap child care, a functioning public transport and a free health science. But a large and expensive social welfare state does not necessarily mean the best. For example Norway is the only Scandinavian country ded ranks in the top 10 for adult education levels, amongst OECD countries. And yet scandinavians remain happy with the status quo, living within a social corporatist economy that provides reliable economic welfare. Having a beer at the end of the day does cost a small fortune, but four people living and working in Scandinavia, high prices provide a quality of life that's worth paying for.