• Sweden's news in English
 

Swedish taxpayers least honest in the Nordics

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

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:

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
Video
Swede buys Soviet tank for winter fun
Jesper Lysell with his new tank. Photo: Private

Swede buys Soviet tank for winter fun

You’ve got $50,000 to blow on “something extravagant”. Do you buy a low-end sports car? Not if you live in southern Norrland, you don’t. You buy a tank. READ  

Sweden braced for fresh barrage of thick snow
A typical drive in Luleå on Friday. Photo: Facebook

Sweden braced for fresh barrage of thick snow

Large swathes of northern and eastern Sweden were preparing for a further dump of snow on Sunday, with the country’s national forecaster warning that as much as 30cm could drop on parts of the country. READ  

'The perfect workout': gym clears snow for free
Aerobic snow-shovelling on Saturday morning: Crossfit Holistics webpage

'The perfect workout': gym clears snow for free

A gym in northern Sweden has turned this week’s monster snowfall into “the perfect workout”, sending its members out for an hour on Saturday to shovel snow around the city for free. READ  

Pirate Bay back online seven weeks after raid
The Pirate Bay's homepage on Saturday. Photo: Screen grab

Pirate Bay back online seven weeks after raid

Sweden’s seeming unquashable file-sharing site The Pirate Bay is back online, seven weeks after police seized servers hosted at a data centre in a nuclear-proof bunker deep in a mountain outside Stockholm. READ  

Roma denied sleep complain of 'torture'
The banner erected by the Roma at Sorgenfri Folketshus. Photo: Solidarity with EU migrants

Roma denied sleep complain of 'torture'

A group of Roma immigrants have complained of “torture” and “terrorism” after security guards at a Malmö night café for homeless people refused to let them sleep on the premises. READ  

Israel 'not happy' at Abbas invite to Sweden
US Secretary of State meets Palestinian President Mahmoud Abbas in Amman, Jordan, in November 2014. Photo: Nicholas Kamm/TT

Israel 'not happy' at Abbas invite to Sweden

Israel’s ambassador has sharply criticised Sweden for inviting President Mahmoud Abbas to Stockholm next month, citing it as further evidence of the “energetic pro-Palestinian line” the country’s government has taken since coming to power after September's election. READ  

Beggars 'objectified' at Malmö exhibition
Roma migrants who have swapped the streets for an art gallery. Photo: Albin Balthasar

Beggars 'objectified' at Malmö exhibition

Two Roma beggars have been paid to take part in a controversial art installation that has seen them sitting and standing in silence with a paper cup in front of them in a Malmö art gallery. READ  

More open borders for Swedish nationals
An SAS plane taking off from Sweden. Photo: TT

More open borders for Swedish nationals

From this summer, Swedes may be be able to leave their passports at home when travelling to the UK and other non-Schengen countries within the EU. READ  

Thick snow set to cause further travel chaos
A sign warns about falling snow and ice in Stockholm. Photo: TT

Thick snow set to cause further travel chaos

UPDATED: Heavy snowfall has caused major traffic problems in parts of western and southern Sweden, with further bad weather set to sweep across the country this weekend. READ  

Presented by Verksamt.se
'Immigration is critical' for Stockholm’s future
The city of Stockholm. Photo: Björn Olin/Folio/imagebank.sweden.se

'Immigration is critical' for Stockholm’s future

Stockholm’s business community gathered on Friday to discuss the future of the city’s labour market. While housing and education were mentioned, it was another theme that reigned supreme. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Lifestyle
What’s on in Sweden this week
Sponsored Article
Stockholm job fair helps immigrant entrepreneurs
Gallery
IN PICTURES: European Figure Skating Championships in Stockholm
National
The return of the Girl with the Dragon Tattoo
Lifestyle
Top five trends from Stockholm Fashion Week
Blog updates

30 January

Editor’s blog, January 30th (The Local Sweden) »

"Greetings from Sweden where much of the country is heading for what could be the coldest..." READ »

 

26 January

The mysterious -s, part 1 (The Swedish Teacher) »

"Hej! How is your Swedish coming along? A while ago I read on a forum on The..." READ »

 
 
 
Gallery
People-watching: January 28th
Business & Money
FATCA: 'The age of financial privacy is over'
National
Does Sweden help returning Isis fighters more than Swedish veterans?
Gallery
IN PICTURES: January snow snaps
Society
Is Sweden's healthcare system a national embarassment?
Gallery
Property of the week: Skanör, Vellinge
Lifestyle
'Life as a Swedish candy-maker is sweet'
National
Why Sweden's Left party wants a European 'Red Spring'
Gallery
IN PICTURES: Sweden's hottest new fashion designers for 2015
Gallery
IN PICTURES: Who travels on Stockholm's different subway lines?
Lifestyle
Why this Swedish baby is a US hit
Lifestyle
'Limousine' snowplough for sale
People-watching: January 24th - 25th
Gallery
People-watching: January 24th - 25th
Society
Meet the 'beggars' buttoning up immigration critics
Gallery
IN PICTURES: Princess Madeleine through the years
Features
Learn Sweden's bizarre dating lingo
People-watching: January 21st - 22nd
Gallery
People-watching: January 21st - 22nd
Society
Why Sweden's viral 'genital' video is getting an English remake
National
Why does Sweden's Luleå have a giant ice beaver?
Gallery
IN PICTURES: Who are Sweden's richest one percent?
Business & Money
How a classic Swedish snack got a revamp for 'busy' Stockholmers
Lifestyle
The Local's top Swedish acts for 2015
Gallery
IN PICTURES: Sweden's Årets Bild photography prize winners
Business & Money
'I met my Swedish man in Tokyo's first Ikea store'
Gallery
Property of the week: A cozy apartment in Bromma, Stockholm
Gallery
People-watching: January 17th - 18th
Lifestyle
How to make Swedish gravad lax
Lifestyle
Four hot Swedish home design trends
National
How The Local's video on a strange Swedish sound went viral
Gallery
People-watching: January 14th
National
The Local's guide to Europe in statistics - from Spain to Sweden
Politics
Paris attacks: Knock-on effects in Sweden and across Europe
National
Swedish Muslims react to new Charlie Hebdo magazine
National
The Local talks to Sweden's Home Affairs Minister about Paris attacks
Business & Money
Will Spotify launch on stock market after users rocket?
Accelerated
Texans and Swedes to play ice instruments
Gallery
Property of the week: An 18th century mansion in Stockholm
Business & Money
'Snowboarding drew me to work in chilly Sweden'
National
Are Sweden's royals moving to London?
Sponsored Article
Everything you need to know about moving to Stockholm
Latest news from The Local in Austria

More news from Austria at thelocal.at

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 Denmark

More news from Denmark at thelocal.dk

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

1,012
jobs available
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
psdmedia.se
Counselling and Psychotherapy in English
Sometimes living in another culture can cause stress, confusion and feelings of sadness and loneliness. Talking to a professional psychotherapist/counsellor might help you. I am a UKCP Reg. psychotherapist. My practice is in Södermalm, Stockholm.
Contact me to discuss your options