Reinfeldt: more tax cuts on the way

Working Swedes are to be given another round of tax cuts, worth 15 billion kronor, Prime Minister Fredrik Reinfeldt has announced.

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Under the plans, marginal tax rates will be cut for low and middle-income groups and the threshold for state income tax will rise, benefiting white collar workers.

"Taken together, this will give a sustainable living to 20,000 people" Reinfeldt told a press conference at the Almedalen political week in Visby, Gotland, on Friday. He added that all the government's tax cuts taken together would create 110,000 jobs.

The government had proposed two alternative tax cut models, one which would have seen cuts costing 5 billion kronor, one which cost 15 billion. The government has now opted for the costlier option.

"This is our starting point. What now remains is negotiations with the other centre-right parties ahead of the autumn budget," Reinfeldt said.

Reinfeldt's Moderate Party said it had calculated that the government's tax cuts for working Swedes meana a nurse on 27,000 kronor a month gets a tax liability reduction of 1,468 kronor.

The prime minister compared the tax reduction with the wage demands being made by nurses in a recent strike. They were asking for a gross wage increase of 1,700 kronor.

"We're nearly matching that net," said Reinfeldt.The next round of tax cuts will give nurses an extra 250 kronor per month.

A metalworker on 24,000 kronor per month will have received total tax cuts of 1,359 kronor per month when the next round of cuts is introduced. A healthcare assistant on 21,000 per month will be 1,204 kronor a month better off and a police officer on 28,000 per month will be 1,494 kronor richer.

Someone on an annual salary of 100,000 kronor will get a 6.3 percent tax cut. Someone on 400,000 kronor will get a 6.1 percent cut. Other people will get cuts of between 4 and 5 percent.

"We are ironing out income differences and fulfilling an ideal of freedom," Reinfeldt said.

The government has around 20 and 30 billion kronor in its coffers to use on tax cuts and extra public spending. This means that a further 10 billion kronor remains available for extra spending on psychiatry, families, infrastructure investments and research, the PM promised.

Tax cuts for pensioners were not on the agenda, Reinfeldt said.

"The real tax beneficiaries in Sweden are pensioners who work, as they get a double worker's deduction," he argued. He added that pensioners in the state ATP pension scheme benefited most from growth and low unemployment, as their pension levels were related to the economy as a whole. The prime minister repeated his promise that the worst-off pensioners, not covered by the ATP scheme - often women over 85 - would get extra help.