Red-Greens split over revamped wealth tax

Sweden's three-party Red-Green opposition remains split on how best to reintroduce a wealth tax system if the government is defeated in next month's election.

• Åkesson slams multi-faith Riksdag service (15 Sep 11)
• New elections to be held in parts of Sweden (11 Feb 11)
• Sweden Democrats suffer municipal exodus (10 Feb 11)

The three parties have agreed in theory to generate four billion kronor ($540 million) for the state coffers through the resurrection of a wealth tax abolished by the current government in 2008.

The Social Democrats favour a relatively mild approach, whereas the Left Party wants the rich to be taxed on every krona, and the Green Party remains sceptical of the tax.

Speaking at a televised debate on Thursday, Social Democrat leader Mona Sahlin said:

"Anyone who is interested can look at the Social Democrats' proposal, which contains methods for how to set both a floor and a ceiling. It will be a reasonable level of taxation."

By introducing an upper limit, the Social Democrats' proposal means Sweden's wealthiest residents will avoid paying tax on their entire fortunes, a move the party believes will prevent the wealth tax from hampering growth.

But Left Party leader Lars Ohly remains opposed to a compromise solution

"It's reasonable to expect the wealthiest people to contribute with their entire fortune as a basis [for taxation]. Growth is better served by investments in risk capital for small companies," he told news agency TT.

The Green Party is opposed to a wealth tax in principle but has reluctantly agreed to support its partners in a potential coalition government. The party's economic police spokeswoman Mikaela Valterson said she hoped further negotiations would steer the triumvirate away from the Social Democrat model, though for different reasons than Lars Ohly.

"One of the problems with a wealth tax is that capital disappears from the country and a ceiling is not going to solve that," she said.