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Stockholmers 'fund the rest of Sweden': report

Published: 21 Oct 2009 16:52 GMT+02:00
Updated: 21 Oct 2009 16:52 GMT+02:00

Stockholm-area taxpayers help fund the rest of Sweden to the tune of 14 billion kronor ($2 billion) a year as a result of a tax equalization system meant to put the country’s municipalities on an equal financial footing.

In 2009, every resident of Stockholm paid 7,180 kronor in hidden transfer payments “rather than the 90 kronor that the system would seem to suggest”, according to a report by Sofia Linder, an analyst with the Stockholm Chamber of Commerce (Stockholms Handelskammare).

The chamber argues it’s time for municipalities minister Mats Odell to change the system, which was last adjusted in 2005 and involves massive transfers of tax revenue between the state and Sweden’s municipalities and county councils.

“The system is completely ludicrous when Stockholmers give money to cities with strong economies like Gothenburg, Malmö, Örebro, and Norrköping,” Chamber of Commerce head Peter Egardt said in a statement.

During a debate arranged to coincide with the release of the report, the system was called Marxist and compared with the reign of the Khmer Rouge in Cambodia.

But there were also defenders of the current system included on the panel, which otherwise consisted of Moderate Party politicians from the well-to-do Stockholm-area municipalities of Täby, Danderyd and Huddinge.

Anders Lago, the Social Democratic mayor of Södertälje, south of Stockholm, thought the report’s conclusions were disgraceful.

“The rich want to have more and couldn’t care less about grandpa and grandma in Flen or the students in Rosengård. My municipality accounts for 15 percent of [Sweden’s] net exports. We contribute to growth in both Danderyd and Täby,” said Lago, according to the TT news agency.

“But people who work here [in Stockholm] don’t live in Södertälje, which also has a large share of immigrants and refugees.”

Södertälje municipality is among the net winners in the current system, as are other cities with healthy economies such as Gothenburg, Malmö, Örebro and Norrköping.

Each city ends up receiving more from the state in the form of equalization grants than it pays in equalization fees.

Over the years, the municipal tax equalization system - which started in the 1960s - has been reviewed several times, and is currently the subject of another government commission investigation into how to improve the system.

Björn Sundström, who heads the current review of the tax equalization system, explained how Malmö’s relatively low tax base has resulted in it becoming a net beneficiary of the system.

“Malmö has unbelievable growth, but the richest residents live in Vellinge or Lomma, which are neighbouring municipalities,” he told the panel.

But Stockholm Chamber of Commerce head Egardt remained highly critical of how the system redistributes Sweden’s local tax revenues.

“The system leads to 278 of Sweden’s [290] municipalities ending up with reduced capacity to carry out measures to boost economic growth. Sweden’s entire growth potential is weakened when the state throws gravel in the economic engine of Stockholm,” he said in a statement.

TT/David Landes (news@thelocal.se)

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Your comments about this article

17:32 October 21, 2009 by Gwrhyr
Maybe they should have municipalities within each län equalize the municipalities within their own län... that way those rich people who live outside of Malmö but work in it can pay for Malmö and not Stockholm.
18:16 October 21, 2009 by richardbw
Parisians and Londoners make the same argument as Stockholmers. But hey Stockholmers look on the bright side at least you control everything on TV!
20:03 October 21, 2009 by Michael84
Still blame me for all unlawful incidents cause i'm not white, and i'm funding three cities and 5 more villages taxes. Damn !
03:41 October 22, 2009 by Weird_X
'rest of sweden'...in ireland we'd call it 'bogside' :D:D
09:54 October 22, 2009 by EtoileBrilliant
Its what the locals call the "Robin Hood Tax". This is also a gross under-estimate of the real amount.

I have a friend who is high up in Telia. As the state's de facto telecoms provider, they must provide a fixed phone line to every house (I think, to be fair, the definition is not every house but one to within 40m of a municipal road) at a certain price and not COST.

The same applies to other utilities (water and electricity). As the offspring of parents who decided to live out in the Styx I can appreciate why people make these choices. I just wish they were made on an informed basis (i.e. how much other tax payers are subsidizing their lifestyle choices).
13:27 October 22, 2009 by Beynch
Since most of the Swedish ruling elite, sits on its fat, besserwiser, butt in Stockholm, cracking the whip over everyone else, it is only fair that these people should contribute to alleviating the destruction they mete out over its rural minions.
17:07 October 22, 2009 by EtoileBrilliant
@Beynch

I must have missed that one! What "destruction" are you referring to?
20:53 October 22, 2009 by Beynch
@EtoileBrilliant:

Oh no you don't! I'm not falling into your trap. - Perhaps you can tell me?
09:34 October 23, 2009 by EtoileBrilliant
@Beynch

Help me, please! I'm still trying to fathom what the "destruction" is you refer to in your earlier post.
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