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Borg plans to remove unpopular tax

An unpopular tax on the wealth of small business owners will be abolished, finance minister Anders Borg has announced.

The so-called Lex Uggla tax relates to wealth tax for people who own small businesses. The tax was named after singer Magnus Uggla was ruled by the tax authority to have put some of his private wealth into his company to avoid wealth tax. Some 35,000 companies are affected by Lex Uggla.

Borg said in a debate in the Riksdag on Friday that the current rules create uncertainty over the amount of money that can be put into companies without increasing the owner’s liability to wealth tax. This in turn creates uncertainty for people who wish to expand their businesses.

“The rules will be the same for all capital in unlisted companies,” Borg said.

The cost to the state of abolishing Lex Uggla is estimated at between 20 and 30 milion kronor, but Borg said that much of this is simply a paper cost, as the tax is hard to enforce. Legislation to remove the tax will be presented in 2007, with the new rules applying from the 2008 taxation year.

Borg said he did not believe that people would use the new rules as a means of avoiding wealth tax by investing in companies. He pointed out that such behaviour was not particularly profitable given other tax rules and given that wealth tax on financial assets will be halved in 2007.

The government has said it intends to abolish wealth tax, but it could take a while before this becomes reality.

“That process lies some way in the future,” said Borg, arguing that other costly reforms are more urgent.

BOMB

Denmark suspects two Swedes over explosion at tax authority

Two Swedish citizens are suspected in connection with last week’s explosion at the Danish Tax Agency. One of the two is in police custody.

Denmark suspects two Swedes over explosion at tax authority
Copenhagen Police superintendent Jørgen Bergen Skov addresses the press. Photo: Philip Davali / Ritzau Scanpix

Copenhagen Police superintendent Jørgen Bergen Skov confirmed the arrests to press on Wednesday morning.

“Both individuals are suspected of carrying out the detonation at the Tax Agency,” Skov said.

One man, aged 22, was arrested in Swedish city Malmö on Tuesday and will be extradited to Denmark. Once he reaches Copenhagen he will appear for preliminary court proceedings, which the prosecution will request take place behind closed doors.

Swedish newspaper Kvällsposten reports the 22-year-old has no previous criminal convictions in the country.

The second man, a 23-year-old, is yet to be detained but an international arrest warrant for him has been issued, Skov said.

“During the night, we also searched several addresses in Sweden. We hereby confiscated what we believe to be a car used by the suspects,” he said.

“We have one suspect on the loose, which means we must be careful about what we say, out of consideration for the investigation,” he added.

The superintendent did not add any detail about how police were able to connect the two individuals to the August 6th explosion.

Skov also stressed that police do not believe the tax authority blast to be connected to a similar incident at a police station in Copenhagen’s Nørrebro neighbourhood in the early hours of Saturday.

“There is nothing to suggest (a connection),” he said.

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