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Sweden to slash restaurant sales tax

Sweden to slash restaurant sales tax

Published: 12 Sep 2011 12:33 GMT+02:00
Updated: 12 Sep 2011 12:33 GMT+02:00

The government has set aside more than 5 billion kronor ($757 million) in the autumn budget to lower restaurant VAT as part of a youth-jobs package that also includes a hike in the number places available in vocational training programmes.

Altogether, the government plans to spend 7.5 billion kronor between 2012 and 2015 to increase young people's chances of finding employment.

Included in the package is 5.4 billionn kronor for lowering the value-added tax paid by restaurant patrons and 1.3 billion kronor for additional spots in vocational training programmes.

An addition 800 kronor will be devoted to reducing the marginal effects for young people attempting to make the transition from receiving benefits to gainful employment.

Starting January 1st, 2012, restaurant VAT will drop from 25 percent to 12 percent.

“The point of this measure is to increase opportunities for young people. There are also many immigrants who find their first job in the restaurant branch,” industry minister and outgoing Centre Party leader Maud Olofsson told the TT news agency.

She added that, in addition to helping young people enter the job market, the VAT cut would also boost tourism in Sweden.

Also included in the government's package is funding for 7,500 new places at vocational trainings programmes for the 2012-2013 academic year.

“How this measure develops will depend on the state of the economy,” said Oloffson.

Education minister and Liberal Party (Folkpartiet) leader Jan Björklund said that, in addition to the lower VAT, the government's youth jobs proposals also includes an 1,000 new places at Sweden's folk-high schools (folkhögskolor), as well as provisions for increased student aid.

Social minister and Christian Democrat leader Göran Hägglund added that the government plans to examine a much criticised mechanism whereby people who take extra jobs while studying loose their student aid benefits incrementally as their work income increases.

He said the matter will be investigated during the spring of 2012 with the goal of introducing a new set of rules by the first half of 2013.

“I can't say today exactly how it will look,” he said.

TT/The Local/dl (news@thelocal.se)

Your comments about this article

13:10 September 12, 2011 by MissK
This is really great news on several fronts, and reminds me of a competitive advantage Sweden has in terms of policy, the ability to implement changes quickly. Looking forward to see how this changes the dynamics, the restaurant VAT was a huge deterring factor for me personally in brainstorming food business plans.
13:37 September 12, 2011 by JulieLou40
"An addition 800 kronor will be devoted to reducing the marginal effects for young people attempting to make the transition from receiving benefits to gainful employment"

Wow. That'll go a long way.
13:55 September 12, 2011 by Rick Methven
I just looked at the precept for my dagens lunch

85kr inclusive 25% Moms

Theoretically, next January it should be 76kr inclusive 12% Moms.

What's the betting it will be 85Kr inclusive 12% Moms
14:11 September 12, 2011 by London_Jim
Bang on, Rick.

In the past 10 years, I've experienced VAT cuts in 3 different countries and the only things that have actually reduced in price in each are automobiles and internet purchases.

More profit for the restaurant owners on the cards...
14:22 September 12, 2011 by Åskar
They claim that landlords will be able to employ more staff, which I find quite laughable. I have no doubt that they will just pocket the money and laugh all the way to the bank.

Also taking in consideration that Anders Borg's wife has a background as a restaurateur the whole thing seems very suspicious.
16:37 September 12, 2011 by Great Scott
Correct Åskar, someone who can see through Sweden's incompetent government.

This will have no effect for Sweden's unemployed, the unemployed will continue to work for free under Sweden's crazy phase 3 scheme. No one in their right mind will employ when they can get a free service. The only people to benefit will be restraurant owners as prices will not fall, most owners will say thank you very much and pocket the cuts.
16:48 September 12, 2011 by Rick Methven
currently the VAT rate on take-away's is 125 and eat in is 25%.

I wonder if they will reduce the vat on take-away's or will the take home eat in prices in Asian restaurants be the same?
18:15 September 12, 2011 by swedejane
Does this mean I'll finally get decent service when I eat out? No? Oh, ok...
18:25 September 12, 2011 by KungsholmenGuy
Taxes in Canada for things like restauraunt meals are added at the cash register as a separate item, so any reduction in provincial or federal taxes provides an instant benefit to the consumer.

Agree that we may not see any real benefit in our restaurant bills here, in at least some restaurants, but then these should (in theory) lose market share to the ones that extend the price reduction to consumers.

The biggest tax reduction on restaurant meals in Sweden would of course be to wait until you get home for that one glass of red wine, which can easily cost over 150 SEK (nearly equal to the price of the main course .... ridiculous)
18:51 September 12, 2011 by jamesblish
Yeah, that'll work because we all know corporations are inherently good and will do what's best for the people and their customers at all times.
20:29 September 12, 2011 by bjorkon
You guys need to believe in the power of markets. It seems to work in every other country that most families can afford to eat out every now and then. In Sweden at the moment it's only birthdays and celebrations.

It's not just corporations that run restaurants. Hopefully some of MissK's contacts will open some restaurants now that the business case starts to stack up.

A step in the right direction ..
21:23 September 12, 2011 by Great Scott
@bjorkon

You need to believe in reality, give some people an inch and they will take a mile. The power of markets = greed, greed = recession, look at today's situation, banks and the power of markets say it all.
21:42 September 12, 2011 by bjorkon
So no hope, then? Just accept the status quo? What would make eating out as affordable here as in most other countries?
21:58 September 12, 2011 by summo
it does have to make sense mathematically, as long as the hype gets folk out spending, who might have otherwise stayed in, it works.
23:35 September 12, 2011 by Great Scott
@bjorkon

What a selfish statement "So no hope, then?"

The answer is simple, if the government wants to give tax cuts then give it to the people who really need it, the lower paid for example, of better still fund a program that invests in people not abuse them with their idiotic phase 3. If the government has money to make tax cuts then it has money to employ people. Give honest people a chance to spend money, this is how you get the economy going, not by lining the pockets of those who don't need it.

Phase 3 is a joke, do you know that an employer gets 5,000sek per month for every free worker and there are currently over 50,000 in this position, do your sums.

Invest in people not the people who already have enough.
00:49 September 13, 2011 by Phrozenkiwi
I have no problem with the policy, and I have no problem with restaurants maintaining their prices and increasing their profits (that would make them more likely to hire more people, no?).

What I do have a problem with is the so-called 'reporting' of this issue. Take one of the opening lines: 'The government has set aside more than 5 billion kronor...'

'The Government' has no frikken money to 'set aside' other than that which it takes from taxpayers. It's not 'their' money to 'set aside'.

For the love of Pete, report it and call it as it is - it's 'taxpayers' money. Always was, always will be.
09:52 September 13, 2011 by RobinHood
The idea is that restaurant owners will invest some of the savings they make through paying less tax, by employing new staff. Thereby reducing unemployment amongst those less qualified to get jobs elsewhere. It also relieves some of the economic pressure on restaurant owners who are increasingly giving up and closing down because they can't make any money in a business that requires huge amounts of time, and huge amounts of risk. A land without restaurants is a sad place indeed.

It's been tried and tested elsewhere, and it seems to work to some extent. It's not a panacea for unemployment, that concept only exists in the imagination of people who think giving tax payers' money to the unemployed and poorly paid will make everything alright.
12:01 September 13, 2011 by izbz
LOL... are they sure that by cutting VAT will boost more employment???? If I own a bar, if it is running well and smooth with minimal staff, why would I want to pay for extra staffs? I will just pocket the money instead..But if they were to implement that if I don't employ more staffs then there will b no VAT cut....that will definately force the restuarants and bars to creat more jobs.

Come on that is to cut taxes for the rich and maybe bleed the average working person with more taxes in the future. I don't really trust this present government at all. VOTE Social democrate!!!!!!!!
12:54 September 13, 2011 by captainbirdseye
Most places in central Stockholm charge the same for both take out and eat in even all though take out is 12.5% compared to 25%. I have seen some places that do charge less for take out, but this is rarity. The 12.5% that you should save from take out is just pocketed by the vendor.
09:52 September 14, 2011 by Great Scott
@RobinHood

Let me point out to you in the first place that the REAL Robin Hood was a MAN of the people. A person who cared about others welfare and hated the fact that the rich took more and more as their GREED increased. You as you call yourself "RobinHood" are a Fake.

Having read some of your selfish greedy posts of the past I am not surprised with the tripe you have dished up this time.

Do you not think that 5,000 SEK per month X 50,000 = 250,000,000 SEK a month or 3,000,000,000 a year (going into fat cats pockets) is not a total waste of tax payers money.

You talk absolute rubbish about restaurants closing down, there have never been so many in Sweden as there are today.

As for being tried and tested elsewhere, Margret Thatcher INCREASED VAT on food and restaurants.

What have you got against the poorly paid and unemployed, or is it your selfish greed that controls you.

Are you aware that the number of unemployed is larger than the number of jobs available in Sweden, are you aware that many welfare related jobs such as nursing, home helps and elderly care are grossly under paid?

The world you dream of is the "I'm alright Jack FU!" world. That kind of world where unemployment is high and services are removed creates poverty and unrest, leading to crime and disorder. Does this sound familiar, because it should.

I would really love to know if you are rich or just plain naive.

I have read lately that David Cameron wants punish those responsible for the London riots, So is he going to put Margret Thatcher in prison because it was her ideas and concepts that bought this about, cuts, cuts, cuts and more cuts. When cuts are made it is always the under paid, poor and unemployed that pick up the bill, not the bankers and greedy rich who started all this.

The world will return to the days of the real Robin Hood if something is not done now.
17:47 September 16, 2011 by IWP
Swedish food is crap anyway. Who wants to eat in their over-priced joints. Unless you're first in you end up with the lunchtime slop. Swedes never think to replace/top-up with decent quality, fresh stuff. It's just a daft joke!
09:32 September 18, 2011 by sjuttiosjusköterskorpåsjukhuset
I always thought that eating out in Sweden is terribly expensive. And for what one got and what it tasted like--except for Chinese food--one would've been better to cook at home and stay home.
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