Alliance to abolish property tax

Sweden’s Alliance bloc is ready to do away with the country’s property tax if they become the majority after national elections in September.

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Announcing the plan at the week-long political retreat at Almedalen, the Alliance (consisting of the Moderate Party, the Liberal Party, the Christian Democrats, and the Centre Party) said it would freeze the tax, stopping any increases for 2007. A tax ceiling of 5,000 kronor would also be initiated.

"This could decide the election," a confident Christian Democrat leader Göran Hägglund said as he announced that he had got the other Alliance parties to sign up to his party's model of abolishing the tax over time and replacing it with a low district fee.

He was supported by Joacim Olsson of the National Association of House Owners, who also said it could have an effect on the outcome of the election.

Political scientist Peter Esaiasson was more cautious, but said that people often voted in their own self-interest. He also pointed to the right-wing bloc's 1979 victory after the Social Democrats' Olof Palme revealed that he had no idea what a house costed.

"Analysis after the election showed that it was one of those times at which self-interest had the greatest importance for how people voted," he said.

But finance minister Pär Nuder dismissed the proposal as "a rush job." He hinted that the Social Democrats might make their own proposals on the issue at a later date, but said that this would not be at the cost of redistribution of wealth. He argued that the Alliance proposal benefits the rich who can afford expensive houses.

"Castles and cabins will be taxed in the same way," he said. But Moderate leader Fredrik Reinfeldt dismissed Nuder's premise:

"We've already got these kinds of injustices, with people who live in big manor houses not paying property tax at all, and with arbitrary rises in the tax when a neighbour sells up,"

He said an investigation would begin if the bloc gains a majority after the fall elections, the Alliance said on Tuesday. It is hoped by the group that reform would happen in 2008.

The agreement means the Alliance has crossed a major hurdle in proving their unity.

The new proposal gives precise details of what would happen in the first year following an Alliance victory. The taxation values of houses would be frozen, the tax on apartment blocks would be reduced from 0.5 percent to 0.4 percent and a ceiling of 5,000 kronor would be set for the tax on the value of a house's plot. In addition, wealth tax would be halved.

"For someone living in an apartment, this means a tax reduction of a thousand kronor. The ceiling on the taxation value of plots means significant reductions for people in the Stockholm, Västa Götaland and Skåne areas," he said.

Property tax revenue gives a big boost to Swedish coffers. According to the proposition, the country will gain 28.1 billion kronor from this year’s property tax revenue and would take in 30.2 billion kronor next year and 32.2 billion kronor in 2008. House owners made up 60 percent of this year’s property tax.

The first stage of the property tax reforms is expected to cost 5 billion kronor, according to the four parties. Full details of how it will be financed will be presented in the Alliance's election manifesto in August. A number of big questions remain to be resolved before the tax can be abolished entirely in 2008.