Borg's plans affect students. File photo: Axborn/Flickr
"You shouldn't stoke the fire in good times," Borg told reporters in Stockholm on Thursday as he mapped out the centre-right government coalition's budget prognosis for the near- and medium term. He said he no longer saw the need to use stimulus measures to keep Sweden's economy buoyant, and argued that it was time to strengthen public finances.
"Sweden needs proper levees in place before the next crisis," Borg said, adding that Sweden's reliance on liquidity and its high household indebtedness was "a big element of uncertainty in the Swedish economy".
To tighten the reins, Borg said he would slash a tax deduction for Swedish pension savers from 1,000 kronor ($153) to 200 a month, with sights set on removing it completely.
"It has a complicated redistributive profile, and is a relic from the high-tax society," Borg said. He explained further that his government's view that more Swedes needed to work beyond their pension age also meant he was critical of a tax system that worked as an incentive to retire.
The new proposals also affect students. The government will cut the student grant by 300 kronor a month, but allow students to borrow 1,000 more than they can today.
With the student loans agency CSN's move to allow students to earn up to 14,100 kronor a month without it affecting the size of their grant, Borg said students had greater leeway in managing their personal finances. All savings in the student grants and loans system would be ploughed back into education, he promised.
"Education is an investment," he said. "We make that clear by introducing improvements to the education system."
The normally tax-shy government, which has introduced income tax cuts in four waves since taking power in 2006, said it would increase fees on vehicles, alcohol, and tobacco to pull in some extra cash. The move would add one krona to a 69-kronor bottle of wine, for example, two kronor to a box of snus, and one krona to a packet of cigarettes.
He said the increase on cigarettes was kept "mild" in order not to facilitate smuggling.
"These taxes may be raised further in the future, but it should happen in small increments," Borg concluded.