Staff charges to be cut for single person firms

The government is to propose reducing payroll tax for sole traders, to encourage them to take on staff.

The plan, which will be laid before Swedish legislators in the autumn budget, would mean that self-employed people would only pay ten percent payroll tax on their first employee, against nearly thirty percent today. According to Swedish Radio, the scheme would be temporary, lasting until 2007.

The idea for the scheme comes from the Finance Department, which presented it to ministers as they gathered at the prime ministerial retreat in Harpsund to discuss the budget.

Speaking to the press at Harpsund on Wednesday Sweden’s finance minster, Pär Nuder, said the scheme was one of a number of measures aimed at tackling unemployment, which would affect 50,000 people.

They would be offered work, training or work experience, Nuder said. Up to 15,000 university places would be created.

Prime Minister Göran Persson announced earlier in August measures to create jobs in the public sector for the unemployed. At the time, he said that he was prepared to sacrifice spending limits to fix the problem of unemployment.

The proposal for reduced payroll tax contrasted from other government proposals in that it focused on jobs in the private sector rather than state jobs .

“We’re glad that the government is shifting its focus from the public sector to small companies,” said Gunvor Engström, head of the Federation of Private Enterprise.

But she criticised the fact that the reductions appeared to be limited to two years, and to one-man firms.

“Employing a person is not something that is just done for a few months or for an election year,” she said.

“The government should therefore reduce payroll tax permanently.”

According to research from Nutek, the Swedish Agency for Regional and Ecomic Growth, there are 110,000 sole traders in Sweden, nearly half of which would like to employ another person.