Unions demand tax increases

Swedish trade union organization LO has called on the government to raise the level of VAT on food and culture to finance increases in benefits. The plans have been attacked by Moderate Party politicians, who say that VAT should stay as it is, and that both benefits and taxes should be cut to encourage people back to work.

LO economists Dan Andersson and Åsa-Pia Järliden Bergström, writing in Dagens Nyheter, also advocate abolishing tax relief on private pension savings.

According to the authors “It is necessary to create uniformity in the tax system. The welfare state of the future must be financed by increased tax income from a wider base”.

Other suggestions from LO were directed at the committee established by the government to examine the tax system. These included calls for enhanced co-operation between the tax authority, customs and the Swedish debt enforcement service at the international level. They also stated that there needs to be better control of household income, which they argue can be achieved by means of improved co-operation between domestic agencies such as tax authorities and social security offices.

Confidentiality requirements often prevent the sharing of information today. LO would also like to see new measures to tackle the black economy which they say distorts competition between companies.

“Our position on tax increases is that they should be as small as possible. However when people demand better care for the elderly and more daycare staff – then it should be also possible to finance this together – and raise taxes”.

The LO economists want to raise the child benefit in order to compensate for the effects of a VAT rise on food. LO also questions other forms of tax relief which they believe are an obstacle to the goal of uniformity in the tax system such as capital gain tax deferrals and the recent changes to taxes on inheritances and gifts. In LO’s view these forms of tax relief give away billions to the most affluent in society.

The LO proposals have found little favour with opposition parties. Moderate Party spokeswoman Gunilla Carlsson said that her party “is not looking to change VAT on food.”

“We were against the idea of lower VAT for food and culture when it was first introduced, but now we see the benefits.”

The Moderates also dispute that tax should be raised in order to fund raises in benefits. Carlsson argues for cuts in benefits, accompanied by cuts in income tax for people on low and middle incomes.

“Too many people are not working,” she says. “We want to give people a financial incentive to get back to work – we want people to feel that they can live a good life with work.”

David Murphy

David Murphy is managing director of Word of Mouth Communications


INTERVIEW: Does coronavirus mark the end of neoliberalism in Sweden?

Just before Christmas, Sweden's finance minister Magdalena Andersson declared that the coronavirus crisis marked "the end of the era of Neoliberalism". But for Daniel Suhonen, the leading ideologue of the Social Democrats' left flank, the party needs concrete policies as well as words.

INTERVIEW: Does coronavirus mark the end of neoliberalism in Sweden?
Daniel Suhonen at the launch of his Reformisterna group of Social Democrats last year. Photo: Henrik Montgomery/TT
The rhetoric Andersson has been using, both in a long interview in the Dagens Nyheter newspaper, and elsewhere, marks a definite shift in tone for the leadership of the centre-left Social Democrats. 
“I think that this marks the end of the era of neoliberalism which was established under Thatcher and Reagan,” Andersson said.
“Going forward, we're going to realise that we need more politics, more collective solutions. My expectation is that the 2020s will be a decade where there is a growing call for collective solutions. This is a paradigm shift.” 
The Social Democrats are seeking to frame the high death rate in Swedish elderly care and the shortages of equipment and staff problems faced by healthcare, as the result of tax cuts, privatisation, and under-investment, arguing that this is the chief message to come from the first report of the Coronavirus Commission. 
Magdalena Andersson is mooted as a potential future leader for the Social Democrats. Photo: Amir Nabizadeh/TT
For Suhonen, who leads Katalys, a left-wing Social Democrat think tank, this is very welcome. 
“She wants to have Socialism a week from now. I'm very happy. She sounds like I have done for the last 15 or 20 years,” he told The Local. 
But he complains that Andersson, in her six years as finance minister, had done almost nothing to counter these problems. 

“Who is guilty of this? In September 2019, one year ago, she was bragging about how she had saved so much money that we were well prepared for the next crisis.  
“But she was only thinking about economic crises. It's a bit of a sad story, because she didn't let the public sector expand when when it could have. We were poor in every sense that mattered in this crisis. We didn't have what we needed to have.” 
What worries him, he said, is that while Andersson is ready to hail the shift in public mood against privatisation, and in favour of higher taxes and higher public spending, she has never followed up with any details of what the Social Democrats might do. 
“In three to four interviews, almost all on the same theme, she says the public mind has changed: no one's wants more privatisation, people want a stronger society, people would maybe accept rising taxes,” Suhonen complained.   
“But she gives no sign that the Social Democrats have those policies. She says, 'the people would like to end privatisation', but she doesn't say, 'we want to end privatisation” .  
Are Social Democrats to blame for starving the state of funds? 
Suhonen pointed out that almost half of the tax cuts over the past 30 years had been carried out under Social Democrat-led governments. 
“During the last 30 years, Sweden has gone from a very clear Social Democratic structure and society, with public monopolies in health care, education and all that, to a very diverse market-oriented neoliberal system,” he said. 
“If what what the state took out from the economy was at the same level today as it was in the year 2000, the public sector would have had 300bn Swedish kronor (€30bn) more every year for public spending.” 
But centre-right Alliance government which ruled from 2006 to 2014 was responsible, he claimed, for just 160bn kronor of those reductions. The rest of the cuts had been carried out under Social Democrats. 
Not a left-wing Social Democrat
Suhonen said his fear was that Andersson was simply positioning herself for a coming campaign to succeed Sweden's current prime minister Stefan Löfven.  
“What you're seeing with Magdalena Andersson is that she knows that this critique is coming. She's maybe one of the ones that want to be the new leader on that day that Stefan Löfven resigns.” 
“She's not a left-wing Social Democrat. She wants to like, have those kind of words in the history of what she has been saying.”
He said that the situation during the past two years, when the Social Democrats have agreed to weaken labour laws and cut taxes for the richest in return for the support of the Liberal and Centre parties, risked undermining the foundations of democracy. 
“It's not the Social Democrats' mission to rule on a neoliberal agenda,” he said. “That destroys how the the political and democratic system works.” 
A historic chance
Where he agrees with Andersson, though, is that the Social Democratic party in Sweden do now have a historic chance to seize control of the political narrative, as their counterparts have successfully done in Denmark. 
Doing so, however, will require bold political action the party has as yet shown few signs it is willing to take. 
“Maybe you can double the number of people that work in elderly care, and maybe you can stop all presentations, maybe you can stop the privatisation of schools,” he said.  
“Of course, I know that the Social Democrats don't have a majority in parliament, but for God's sake start doing this!”
“If the liberal parties don't want this, then call a snap election and make it a referendum about the welfare state and privatisation.”