The tax reductions will give create 50,000-100,000 new jobs in Sweden, as it will reduce pressure on employers to increase wages, the Alliance claims.
The four-party alliance laid out plans to introduce tax breaks, putting flesh on the bones on the agreement they announced in August to cut tax by 45 billion kronor. The cuts are focused on those who earn under 10,000 kronor a month – as long as that income is earned.
The first 30,000 kronor of people’s annual wages will be tax free. Taxpayers will be able to make a further 20 percent deduction on the next 70,000 kronor.
According to the opposition calculations, most workers in Sweden will get a tax reduction of about 1,000 kronor per month. TT reports that a nursery school teacher would keep an extra 900 kronor per month, and a metalworker an extra 1,100 kronor per month.
The new tax break will not be given to those whose income is not earned.
The scheme is designed to encourage people on sick or unemployment benefits back into work, so a person on sick benefit who starts to work half-time will get a tax reduction of 600 kronor per month.
“The biggest difference will be for those who today are socially excluded, living on benefits, or who work part time,” said Moderate Party leader Fredrik Reinfeldt to Swedish Radio.
“They will really notice the difference when they work more,” he said.
This will mean that the state will lose 45 billion kronor per year in income tax revenue. The opposition plans to recoup this partly through lower benefits for the unemployed, and partly through an increase in people’s unemployment insurance contributions. Road tax will also be increased, and the tax deduction on union membership fees will be scrapped.
Pär Nuder, finance minister in the Social Democrat government, said that wage earners “will have to pay for their own tax reductions, through higher payments in unemployment insurance premiums, through lower unemployment benefits, and through lower sick benefits.”
Nuder also said that the Alliance had not adequately demonstrated how their proposals would be financed, and said that claims that the road tax reduction would save 8 billion kronor had been shown to be “hot air.”