• 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

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
National
Anti-Israel graffiti 'not a race crime': Court
Photo: TT

Anti-Israel graffiti 'not a race crime': Court

A teenage boy who painted anti-Israel slogans and symbols on the Concert Hall in Gothenburg has been convicted for the damages he caused, but he walked free from racial agitation charges. READ  

Politics
Israel's ambassador recalled from Sweden
Israeli ambassador Isaac Bachman. Photo: TT

Israel's ambassador recalled from Sweden

Israel has recalled its ambassador from Stockholm "in irritation" that Sweden has officially recognized the State of Palestine. READ  

Entertainment
A closer look at Sweden's rising stars
Swedish actresses Sandra Huldt and Julia Ragnarsson. Julia (right) has been nominated for a Rising Star award. Photo: TT

A closer look at Sweden's rising stars

Like to be ahead of the game when it comes to the next big thing on the silver screen? We find out more about the Swedish nominees for the Rising Star award to be presented at Stockholm's International Film Festival next week. READ  

Science
Swedish women in two-year sex pill study
Contraceptive pills have been linked to mood swings. Photo: Shutterstock

Swedish women in two-year sex pill study

Three hundred women from across Sweden are taking part in a study designed to demonstrate that modern contraceptive pills don't lead to decreased libido or mood swings. READ  

National
Stockholm 'sinking' oil spill ship safe
The ship was rescued on Thursday. Photo: Swedish Coast Guard

Stockholm 'sinking' oil spill ship safe

After fears a ship carrying around 52 tonnes of oil could sink in Stockholm's archipelago, Sweden's Coast Guard said the vessel had been towed to safety. READ  

National
Dog attack policewoman acquitted on appeal
A scene from a video of the attack published by Dagens Nyheter

Dog attack policewoman acquitted on appeal

A policewoman accused of letting her dog attack a drunk man while she repeatedly hit him with a baton, has had her conviction overturned by a court in Stockholm. READ  

Entertainment
What's On: October 31st - November 7th
Uma Thurman will soon be on her way to Stockholm. Photo: TT

What's On: October 31st - November 7th

Halloween fun and an international film festival are the big events hitting Stockholm this week. We cast our eye over the capital and the rest of the country for the best activities to check out this week. READ  

International
Pirate Bay Swede found guilty in Denmark
Gottrid Svartholm Warg. File photo: TT

Pirate Bay Swede found guilty in Denmark

Sweden's Pirate Bay Founder Gottrid Svartholm Warg was found guilty of hacking crimes in a Danish court on Thursday. READ  

National
Malmö loses out as rare toads move in
The European green toad. Photo: H. Krisp (WikiCommons)

Malmö loses out as rare toads move in

After a rare species of toad moved into southern Sweden's Malmö, builders have had to tone down massive expansion plans in the area. READ  

Politics
Palestine recognized as state by Sweden
Sweden's Foreign Minister is Margot Wallström. Photo: TT

Palestine recognized as state by Sweden

The Swedish government has officially decided to recognize Palestine, with the move announced in a speech by the country's new Foreign Minister Margot Wallström. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Lifestyle
Stockholm's shocking take on Halloween
Sport
Top ten quotes from Zlatan Ibrahimovic
Business & Money
Get your own office in Gothenburg or Stockholm - free for a day
Gallery
People-watching: October 30th
National
Sweden remains fourth best for gender equality
Blog updates

29 October

Scariest day (Blogweiser) »

"This is what’s frightening me on Halloween. http://www.youtube.com/watch?v=D4OFZVCu8J0&list=UUJu5J7jG4uoYSjWbpFsJBuQ Follow my posts on FB. ..." READ »

 

24 October

Editor’s blog, October 24th (The Local Sweden) »

"Hi readers, Get ready to read our weekly digest of Swedish news in less than 60 seconds. The..." READ »

 
 
 
National
Timeline: Julian Assange sex allegations
Sport
World Cup ski race on 'fake' Stockholm slope
Society
An Arctic tradition: hunting and handicraft
Society
Stockholm taxis offer free therapy sessions
National
The Local meets Health Minister Gabriel Wikström
Gallery
Property of the week: Österåker
Society
Homeless turtles get Stockholm police ride
National
Construction worker has 'Sweden's best beard'
National
Italian musician jazzes up Sweden's Lapland
Gallery
Zlatan's career in pictures
Finest.se
Gallery
People-watching: October 25th and 26th
Lifestyle
'Swedes are funnier than they think'
National
Swedish town 'like Venice' after heavy rains
Lifestyle
What's On in Sweden: October 24th - 31st
Gallery
People-watching: October 22nd
Gallery
In Pictures: Prince Carl Philip and Sofia Hellqvist
Lifestyle
Eight things to love about renting a Swedish apartment
National
Vasa ship cannon blasted in Sweden
National
Sub hunt: Day-by-day
National
Sub hunt: Stockholm islanders share their fears with The Local
Sponsored Article
The best options for oversea transfers
National
Dentist gives free care to Roma beggars
Gallery
Property of the week: Malmö
Gallery
PHOTOS: 'Foreign activity' in Swedish waters
TT
Society
QUIZ: How good is your Swedish?
Society
The nudity... and nine other things expat men notice in Sweden
Gallery
People-watching: October 15th
Gallery
Your views: Should outdoor smoking be banned in Sweden?
Business & Money
Sweden has 'large hole' in finances
Sponsored Article
Introducing... Finding a job in Stockholm
Society
Monster salmon caught in northern Sweden
Gallery
Property of the week: Lorensberg
National
Scandinavia's child bride
National
Ebola crisis: How is Sweden preparing?
Business & Money
How Sweden is becoming a cashless society
Gallery
Stockholm Burlesque Festival 2014
National
How a little red horse became a symbol for Sweden
Gallery
People-watching: October 12th
Business & Money
The hottest start-ups from southern Sweden
National
Stockholm is 'best' region for well-being
Sponsored Article
How to catch the first lobster of the year
Team SCA
Sponsored Article
All-female SCA team takes off on Volvo Ocean Race
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

970
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
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:
http://psdmedia.se
If you want to drink, that’s your business.
If you want to stop, we can help.

Learn more about English-language Alcoholics Anonymous in Sweden. No dues. No fees. Confidentiality assured.
AA-EUROPE.ORG/SWEDEN