“Tax hikes: not the way forward”

Sweden faces a number of challenges, one of which is its ageing population. Other challenges include the housing shortage and immigrant integration, writes Jens Spendrup, chair of the Confederation of Swedish Enterprise in a debate article in business daily Dagens Industri.

Public finances will come under strain in the next few years, but tax hikes are not the way forward, he argues. The fact that there are large and unexplained differences in the cost of public services around Sweden shows that there are significant efficiency gains to be made.

Above all, the Sweden’s business environment must improve so that more people dare set up companies, develop their ideas and recruit staff. Measures such as lower starting salaries and simple jobs that could be introduced, making it easier for companies to employ people and for the jobless to find work, Spendrup suggests

Government betraying voters

Bil Sweden, the association that represents manufacturers and importers in the automotive industry, has accused the government of betrayal after it announced plans to hike fuel taxes, even though both PM Stefan Löfven and Finance Minister Magdalena Andersson promised not to raise taxes in the run up to the election last year.

Bil Sweden MD Bertil Moldén says a survey carried out by Statistics Sweden on behalf of the Swedish Taxpayers’ Association (Skattebetalarna) shows that close to one million households will each pay an additional SKr 5,500 in fuel taxes over the next three years. The hikes will hurt rural residents and companies in particular, who often have no alternative means of transport.

Moldén is also highly critical of the way in which the government is now trying to “sneak in” a further hike, by proposing indexation of fuel taxes from 2017. He warns that this would lead to a 50% hike over a decade.

Government raises taxes

Finance Minister Magdalena Andersson and Financial Markets Minister Per Bolund called a press conference on Friday to say that the government intended to raise employer contributions for the under 25s. The government also proposed a hike of 0.44 kronor per litre on petrol tax and of 0.48 kronor on diesel, as well as an increase on the tax on nuclear power generation and on certain types of savings. A cut in the deduction on household services, RUT, and in the deduction on home renovations, ROT, will also be made.

As of 1 August, the government will start raising employer contributions for the under 25s – from 15% to 25%, which will generate an additional SKr 5.6 billion in revenue for the Treasury.

However, the main changes, which will bring an extra SKr 22 billion into the state coffers, will come into effect on 1 January 2016.

Magdalena Andersson is still keen to introduce a bank transaction tax but this is unlikely to come into effect before 2017, at the earliest.

Anna Kinberg Batra, the leader of the main opposition party, the Moderates, said on hearing the government’s plans: “Heavy tax hikes on households, transport and companies – how does that make Sweden stronger or create more jobs?”

Meanwhile, Erik Ullenhag, the Liberal Party spokesman on economic policy, accused the centre-left government of breaking one election promise after the other, thereby damaging its credibility on economic policy.