Sweden to slash restaurant sales tax

Patrons at Swedish restaurants will see the value-added tax (VAT) added to their bills cut by more than half staring January 1st, 2012 as part of a government spending package designed to boost employment among young people.

• LinkedIn profile lands Swede with hefty tax bill (17 May 13)
• Car service app battles Stockholm taxi system (8 May 13)
• Opposition parties want inquiry into Nuon deal (5 May 13)

The government has set aside more than 5 billion kronor ($757 million) in the autumn budget to lower restaurant VAT as part of a youth-jobs package that also includes a hike in the number places available in vocational training programmes.

Altogether, the government plans to spend 7.5 billion kronor between 2012 and 2015 to increase young people's chances of finding employment.

Included in the package is 5.4 billionn kronor for lowering the value-added tax paid by restaurant patrons and 1.3 billion kronor for additional spots in vocational training programmes.

An addition 800 kronor will be devoted to reducing the marginal effects for young people attempting to make the transition from receiving benefits to gainful employment.

Starting January 1st, 2012, restaurant VAT will drop from 25 percent to 12 percent.

“The point of this measure is to increase opportunities for young people. There are also many immigrants who find their first job in the restaurant branch,” industry minister and outgoing Centre Party leader Maud Olofsson told the TT news agency.

She added that, in addition to helping young people enter the job market, the VAT cut would also boost tourism in Sweden.

Also included in the government's package is funding for 7,500 new places at vocational trainings programmes for the 2012-2013 academic year.

“How this measure develops will depend on the state of the economy,” said Oloffson.

Education minister and Liberal Party (Folkpartiet) leader Jan Björklund said that, in addition to the lower VAT, the government's youth jobs proposals also includes an 1,000 new places at Sweden's folk-high schools (folkhögskolor), as well as provisions for increased student aid.

Social minister and Christian Democrat leader Göran Hägglund added that the government plans to examine a much criticised mechanism whereby people who take extra jobs while studying loose their student aid benefits incrementally as their work income increases.

He said the matter will be investigated during the spring of 2012 with the goal of introducing a new set of rules by the first half of 2013.

“I can't say today exactly how it will look,” he said.