The Swedish tax authority (Skatteverket) will in the coming weeks distribute 15 billion kronor ($2.46 billion) in tax rebates to 2.4 million Swedes. Much of the money will go to paying off debts and less money will be spent on consumption as the uncertain economic climate takes its toll on confidence. High inflation, increasing interest rates and stock market turbulence has made tax payers more cautious.
“The number intending to reduce their debts has almost doubled during the past year,” said Claes Hemberg at Avanza Bank to research organisation Sifo.
13 percent of those surveyed said that they would spend their tax rebate on reducing debts in comparison to only 7 percent in 2007. At the same time the number that intend to spend their money on luxury consumption has decreased from 39 percent to 31 percent.
“Much of this is to do with reducing exposure to risk in the future, but the main reason is probably that mortgage and interest payments constitute too greater share of expenditure,” said Ylva Yngvesson at Swedbank to Sifo.
Retailers are not overly concerned however despite the results of the survey.
“Our own retail panel has forecast strong sales in the coming three month period,” said Margareta Ternell at trade organisation Svensk Handel.
According to Svensk Handel retail sales are forecast to increase by four-five percent in the summer in comparison with the corresponding period of 2007.
“It is a slightly lower rate of growth,” observed Margareta Ternell.
Sifo interviewed 1,300 people in late May, early June on how they planned to spend their tax rebate.