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Capital gains proposal slammed

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19:24 CEST+02:00
Sweden's unions and business leaders have slammed plans by the government to increase capital gains tax on homes.

The government plans to increase the tax to 25 or 30 percent, from the current level of 20 percent. According to Krister Andersson, tax expert at the Confederation of Swedish Enterprise, the rise will harm labour market flexibility:

"People will hesitate to move, and what will happen if house prices fall? It will become hard to buy a new home," he said.

People who sell a house or apartment in Sweden can defer payment of the tax if they buy another property. Swedes have currently postponed paying 150 billion kronor of tax in this way. Higher taxes will make more people choose to defer payment, said Krister Andersson. He said he would like to see a tax of 10-15 percent payable immediately.

Dan Andersson, chief economist of union umbrella group LO, agreed that the tax increase could harm labour market flexibility.

"We are working on a proposal for people to pay interest on the increase in value. If a house rises in value by 100,000 kronor in a year, they pay two percent - 2,000 kronor - to the state. Alternatively, they can pay when they sell it. The advantage is that people have the freedom to pay now or pay later," he said.

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