Swedes cheat taxman of 120 billion

Sweden, a land synonymous with high taxes, has a dirty secret. Each year some 120 billion kronor is paid to workers under the table and nearly 10 percent of the population has admitted to working off the books at some time in their life, according to a study by the Swedish Tax Agency.

The study said small business owners were at the crux of the problem. While small business owners make on average less than their friends employed in the same sector, they have better homes and nicer cars – something that leaves the tax collecting agency scratching its head.

The Agency believes there is a discrepancy between society’s income and household consumption. This means Swedes are refusing to pay the high taxes and are short-changing the government by some 120 billion kronor each year. Small businesses are suspected of holding back some 71 billion kronor of that sum.

The agency estimates some 800,000 Swedish residents have worked under its radar. Its report said Swedes pay out some 7,000 kronor for illegal work each year, while those workers earn about 19,000 on average annually. Those who work illegally are typically younger workers with little money, while those paying have on average more money and own their own house.

About 25 percent of those working under the table are students or are performing compulsory military service

Nearly 30 percent of the population has bought items or services without paying taxes during the past five years. The European Union average is 24 percent. Swedes are among the most taxed people in the world. Switzerland, on the other hand, has one of the lowest tax rates and the lowest level of illegal workers, according to TT.

Håkan Malmer, an investigator with Skatteverket, isn’t so surprised by the reports figures.

“The investigation corroborates the picture we have at Skatteverket,” he said, according to Dagens Nyheter. “But this is the biggest study we have done, and this gives us a very clear picture.”