Alliance parties agree to reduce taxes

The Alliance parties have agreed to reduce income tax by 10 billion kronor next year, as part of the fourth stage in the parties’ in-work tax credit programme (jobbskatteavdraget), news agency TT has revealed. The tax cuts will mean individual tax reductions of up to 250 kronor per month.

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At their summer conference in Vaxholm last Saturday, Prime Minister Fredrik Reinfeldt said that the Moderate Party’s position in budget negotiations between the government parties is for a tax reduction of 10 billion kronor.

Asked about the position in Västerås, Fredrik Reinfeldt said that nothing is settled in the negotiations. But two independent sources within the Alliance privy to the negotiations confirmed to TT that the parties are in agreement about the tax reductions.

“You can refer to what Reinfeldt said in Vaxholm,” said one of the sources, on the question of how large the tax reductions would be.

A tax reduction of 10 billion kronor would mean a tax break of between 200 and 250 kronor per month for most employed people. According to the Ministry of Finance’s calculations, in the short-term that would mean 3,000 more jobs, and 10,000 more in the long term.

The fourth stage in the Alliance parties’ in-work tax credit programme will mean an auxiliary nurse will have 204 kronor more per month and a high school teacher will have an extra 245 kronor per month. Pensioners will not receive a deduction under the Moderates' position, an issue that has been a source of conflict within the Alliance parties.

The Christian Democrats have argued that pensioners should also receive a share of the tax reduction. The Centre Party has suggested instead a tax reduction for employer taxes, but according to the Moderates, the new tax reduction will benefit more people.

According to the TT source, all parties can look forward to a future for their own demands, which have been taken into account during the Alliance government negotiations.

That should mean that even pensioners will receive something in the autumn budget. It has been clear for some time that county councils will receive more money, but it remains unclear how much. Less certain is whether the money will also be enough to satisfy the Centre Party's demands for reduced employer tax.