• Sweden edition
 
Swedish taxpayers least honest in the Nordics

Swedish taxpayers least honest in the Nordics

Published: 08 Feb 2013 17:28 GMT+01:00
Updated: 08 Feb 2013 17:28 GMT+01:00

Sweden has the biggest black market in the Nordic region, according to a new study, which also found workers in France are more honest than their Swedish counterparts in reporting their income to tax authorities.

According to an annual survey by German economic institute IAW, the black market in Sweden is estimated to represent 13.9 percent of the country's GDP.

The figure compares favourably to Greece and Italy, where undeclared economic activity totals 24.6 percent and 21.1 percent of GDP respectively, yet Sweden's shadow economy is larger than the OECD average of 12.6 percent of GDP.

Finland and Denmark, meanwhile, have under-the-table economies measuring 13.0 percent of GDP, according to the study, with Norway's measuring 13.6 percent.

Tax authorities in France and the UK were found to be collecting a larger portion of taxable income than any of the Nordic countries, with the black markets there estimated at 9.9 percent and 9.7 percent of GDP respectively.

For the tweltth year in a row, however, the world’s most honest taxpayers are found in the United States, where unreported economic activity only accounts for 6.6 percent of GDP, the study found.

While Peter Isling, spokesman for the Confederation of Swedish Enterprise (Svenskt Näringsliv), hadn't reviewed the details of the IAW study, he initially expressed surprise that Sweden didn't rank higher than its OECD counterparts.

However, he cited the high taxes on Sweden's relatively small service sector as one of the possible explanations.

"Sweden has relatively high taxes on services. And if it costs a lot to purchase certain services, consumers are often open to getting things done in an alternative way," he told The Local.

"What we've seen, however, is that the reforms allowing tax breaks on household services and home improvement work have had an effect. The black market in these sectors has decreased."

Indeed, the study found that Sweden's shadow economy has shrunk by 4.2 percent in the last decade, one of the largest decreases among the 21 countries included in the study, which ignored earnings from criminal activity.

However, Sweden's high taxes and relatively high entry-level wages likely help fuel the black market, according to Isling.

"There simply aren't that many entry-level service jobs in Sweden, in part because wages at the bottom end of the scale are relatively high, and in part because they are taxed so much," he said.

"If services are really expensive, consumers may turn to the black market."

He suggested that extending tax breaks to other sectors might also help Sweden reduce the size of its shadow economy.

"Similar reforms in other sectors could lower prices for consumers so they would be less tempted to buy on the black market."

David Landes

Follow David Landes on Twitter

Related links:

Don't miss...X
Left Right

Your comments about this article

18:48 February 8, 2013 by skatty
I think the report is true; however, I wonder why it has been discovered so late!

First time, I have learned and heard about escaping from tax in my SFI class and by my Swedish language teacher at school for many years ago. He was talking about how to find a carpenter to repair his house not on a formal contract, but by an agreement out of the tax regulations!

My nervous chain smoker Swedish teacher had many ideas about different methods of escaping from tax in his SFI class; however, he always encouraged us (the newcomers) to follow Swedish laws and regulations during his chain smoking in pause times.
19:26 February 8, 2013 by theobserver
Ha, ha, there goes the Swedish honesty down the drain! Swedes have sworn to me that they are the most honest, the most lawful, the most proper citizens in the world. "Tax authority", Swedes told me, "is like religion for us; we never, ever, think about not paying taxes properly."

What a bunch of liars!

It's funny that they try to make newcomers pay taxes when they themselves avoid them.
22:57 February 8, 2013 by ZZTop
Nor surprise there. This is the new Sweden. Go to Malmö and ask for a receipt in most restaurants or small shops, and they will look at you in astonishment. If they understand you.
08:44 February 9, 2013 by Lavaux
The problem is the high VAT rate on services, the high social fee rates, and the fact that tax-compliant sole traders must add these high taxes into the price of their services. In competitive services markets, one gets much more competitive the less tax-compliant one operates.

By some estimates, the illicit economy in Sweden is as large as 19% of GDP, measured by comparing the velocity of cash money with other kinds. Sweden's leftists don't like to talk about tax avoidance and evasion because it contradicts their entire theory of human nature. In truth, Swedes are just as rational when it comes to economic calculation as any other people, and just as motivated by self-interest.
10:10 February 9, 2013 by eppie
I think Sweden still thinks the world is like it was 20 years ago.

There are many rules but there is not really a lot of enforcement. 20 years ago that was fine but swedes have become more capitalist and egoistic and so will evade taxes.

Traffic is another perfect example; there are lots of rules but everybody knows that in Stockholm the chance of being caught when you pass with a red light is almost 0.....so everybody does it now. Every other country in europe (even the southern ones) and the US use traffic camera's but Sweden still think they don't need these.
18:10 February 9, 2013 by Kronaboy
I would go further, from my experience EU structural funds are often fraudulently misused (including by well-known household brands) in bogus EU-funded training programmes whereby unproductive lazy swedes (who would otherwise be redundant) are permitted stay at home for 2-3 days a week, rather than thrown out on the dole where they belong????
10:34 February 10, 2013 by Migga
Link this story with the one about the fake wheelchair guy and you`ll understand why the rate has gone up.

http://www.thelocal.se/46098/20130209/
12:27 February 11, 2013 by matressmonkey
Would love to see the breakout of cheats according to ethnic Swedes, first generation Swedes and immigrants. Is it that Swedes are becoming more corrupt, or that Sweden is accepting newcomers from more corrupt cultures? And my dad's from Syria so I'm just calling it as I see it, not out of some bias.
12:49 February 11, 2013 by Twiceshy
You guys with the usual racist comments, didn't you read the article? It says that the black market economy is DECREASING.
14:26 February 11, 2013 by matressmonkey
A large reason the Swedish black market economy is decreasing on paper is because of the way it is measured. The measurement is also affected by programs such as Rut Avdrag which took effect in 2007. This program has reduced one piece of the black market via massive tax-funded government spending while other parts of the black market have grown and grown steadily. And its not because our generous Swedish hosts have suddenly gone gangsta.
09:29 February 12, 2013 by Max Reaver
LOL, I see trolls who relate this matter to immigration as a brainless-reflex!
01:57 February 18, 2013 by workforthesoup
A sizeable majority of thelocal readers are racist and they themselves are immigrants! What a hypocrisy!
Today's headlines
Florida 'mystery knight' dies in Sweden
Michael Boatwright (R) and Medieval knight re-enactors.

Florida 'mystery knight' dies in Sweden

The "motel mystery" American who baffled US authorities by only speaking Swedish when he woke up from a coma last year has passed away, Swedish media reported on Wednesday. READ () »

Swedes open coffin of 850-year-old king
Photo: Bertil Ericson/TT

Swedes open coffin of 850-year-old king

UPDATED: Scientists pried open the 850-year-old casket of King Erik the Holy on Wednesday, hoping to find out more about the king, his crown, and his eating habits. READ () »

TeliaSonera announces first-quarter profit drop
TeliaSonera CEO Johan Dennelind. File photo: TT

TeliaSonera announces first-quarter profit drop

Stockholm-listed telecom operator TeliaSonera on Wednesday said profits had fallen in the first quarter, but hoped offering customers more data solutions in the future would turn things around. READ () »

'Imperfect EU better than revolting nationalism'
Fredrik Reinfeldt. File photo: TT

'Imperfect EU better than revolting nationalism'

Swedish Prime Minister Fredrik Reinfeldt on Wednesday urged young voters to head to the European parliamentary polls on May 25th "to cure the European disease of nationalism". READ () »

Ericsson quarterly profit defies sluggish sales
Ericsson CEO Hans Vestberg at the first quarter press conference. Photo: TT

Ericsson quarterly profit defies sluggish sales

Swedish telecom giant Ericsson on Wednesday announced a drop in sales but posted a sharp rise in first-quarter profit, which nonetheless fell shy of analyst predictions. READ () »

Fatal Norrköping brawl
Four brothers held as cops fear brawl reprisals
Photo: Johan Nilsson/TT

Four brothers held as cops fear brawl reprisals

Swedish police fear that several people involved in a brawl in eastern Sweden on Monday night may be seeking revenge after two brothers were shot dead. READ () »

Sponsored Article
Beautiful pearls of southeast Sweden
The town of Västervik.

Beautiful pearls of southeast Sweden

Ask a Swede, and they are likely to say that their favourite holiday spot is in the southeast of Sweden. Eastern Småland and Öland offer a smörgåsbord of all the things dearest to the Swedes - from the beloved children's book author Astrid Lindgren to deep forests, long sandy beaches, perfect spots for that all-important 'fika', and a surprising amount of space, peace and quiet. READ () »

Weekend weather to bring summer warmth
Swedes enjoy hot dogs and cherry blossoms in Stockholm's Kungsträdgården. Photo: Jessica Gow/TT

Weekend weather to bring summer warmth

The sun is set to stick around and temperatures could climb into the twenties over the weekend, Swedish meteorologists said on Wednesday READ () »

'Day-care rapist' admits molesting eight kids

'Day-care rapist' admits molesting eight kids

A 21-year-old man confessed on Wednesday to sex crimes against eight children at a day care where he was working as an intern. READ () »

Swedish cops nab man for having big muscles
An unrelated bodybuilder. File photo: Ann Törnkvist

Swedish cops nab man for having big muscles

Police in Sweden's south who hauled a muscular man in for steroid testing have had their knuckles rapped, after it was ruled that big biceps cannot be grounds for narcotics suspicions. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
Features
Sponsored: South-eastern Sweden offers Öland beaches and more
Gallery
Swedish underwear shop puts staff in front of the camera
Gallery
IN PICTURES: The Local's Property of the Week - Täby
Sponsored: India+Sweden Week - India Unlimited
Features
Sponsored: India+Sweden Week - A film, food, and finance feast
National
University applications rocket to record high
finest.se
Gallery
People-watching April 18-20
TT
Society
Kids in Victorian garb mark Swedish Easter
Shutterstock
National
Swedish MP ordered chemtrail probe
Society
Swedish supermarket Ica pulls contested Easter commercial off air
Kungahuset
Society
Swedish royals set baptism date for princess
finest.se
Gallery
People-watching April 16
Politics
Who's the prime minister's heir?
Advertisement:
Alfie Atkins
Society
Are children's books the key to families integrating in Sweden?
National
'Sweden Dem protests cater to party's martyr image'
National
'Swedish research grants were fantastic, but now it's like Australia'
Society
Only in Sweden: The ten problems you'd never encounter elsewhere
National
Swedes stopped to take my picture, but didn't look me in the eyes
Business & Money
A swipe of the hand replaced cash and cards in Lund
YouTube
Features
Video: Oliver Gee finds out how to embrace The Swedish Hug
TT
National
Abba duo hints at reunion
Private
National
Flash mobs hug it out across Sweden
Finest.se
Gallery
People-watching April 11-13
TT
Politics
Swedes to give six-hour workday a go
Stockholm School of Economics
Sponsored Article
Why a bachelor's degree is no longer enough
Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Blog Update: The Diplomatic Dispatch

28 October 15:16

The Green Growth Group Summit »

"Today on the 28 October in Brussels, a large group of key EU Ministers and business people, including UK Secretary of State for Energy and Climate Change Edward Davey, and Swedish Environment Minister Lena Ek, will meet to discuss green growth. They all have a stake in resolving a challenge which, although it is crucial..." READ »

712
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com