Sweden in new round of cut taxes to boost employment

A new measure to tackle Sweden's rising rate of unemployment has been proposed by the Swedish government, with tax cuts of 10 billion kronor ($1.4 billion) hoped to stimulate the job market.

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Prime Minister Fredrik Reinfeldt and three other ministers in the four-party coalition said the reduction would mean most wage earners would have 200 to 250 Swedish kronor more in take-home pay every month.

The proposal, to be presented to parliament on Monday as part of the 2010 budget bill, is the fourth leg of a tax cut programme introduced in January 2007 to stimulate employment.

The fourth leg would enter into force on January 1, 2010.

With that step, 99 percent of full-time employees will have had their taxes reduced by a total of 1,000 Swedish kronor per month, while 75 percent will have had reductions of 1,500 Swedish kronor, the government said.

"The coalition government has agreed on reforms for jobs and entrepreneurship that will increase employment in the long-term. It has to be more profitable to work and more companies should be able to hire employees," the government said.

Since coming to power in late 2006, the government has launched a series of measures aimed at inciting Swedes to return to the job market instead of living off of state subsidies.

But instead of declining Sweden's unemployment rate has risen, from 5.7 percent in August 2006 to 8.0 percent in August 2009. Much of the increase has been attributed to the international economic crisis.

The government said it would also propose a series of measures in the budget bill aimed at boosting incentives to start companies and improve the business climate.