‘Taxes still too high in Sweden’

Sweden's government needs to continue lowering taxes if the country is to get to grips with excessive public spending and an eroding work ethic, argues Nima Sanandaji.

'Taxes still too high in Sweden'

The Swedish government has implemented ambitious tax reforms. However, the average taxpayer still pays three out of five earned kronor in taxes. And the public is still unaware of the extent of taxation.

In a survey conducted a few years ago it was shown that the majority of Swedes vastly underestimate the amount of taxes they pay. Half of those questioned for the survey believed that they paid 36 percent or less in taxes. Many do not know that the so-called hidden taxes are approximately as high as the visible taxes.

In Denmark political parties to the left and the right have agreed on implementing a tax reform that means the highest marginal rate of tax on labour will be reduced to below 50 percent next year. The same tax rate is 57 percent in Sweden. If hidden taxes are also included, the total highest marginal tax rate on labour is a full 74 percent in Sweden.

But won’t tax cuts undermine the so-called Swedish model? It is important to remember that Sweden was a country with even distribution of income, relatively few social problems – such as crime – and high life expectancy back in 1950. At that time Sweden had a lower tax rate than the United States. Low taxes and ample opportunities for entrepreneurial activity brought about Sweden’s high standard of living.

It was when politics radicalized during the 1960s and onwards that Swedish taxes began to rise to the high levels we know today. When taxes reach a high enough level they tend to be spent on things other than crime reduction, qualitative health care and education. It is no coincidence that Sweden has several hundred public agencies that, among other things, are occupied with ”supplying Swedish sailors with a meaningful cultural life”.

As taxes have risen, so has welfare dependency. In 1970, around 11 percent of the adult population of Sweden was living off various forms of public handouts rather than work. In the summer of 2006 this figure had doubled to 22-23 percent. It is of course important to have public safety nets, but the high dependency on handouts is draining public resources. This is why Sweden has higher taxes than other modern nations but cannot offer higher pensions.

In fact, a comparison with other industrialised countries shows that Swedish senior citizens receive an average level of pensions. The average pension income is 14,000 kronor ($1,500) per month in Sweden, compared to 18,500 kronor per month in Austria and 17,700 kronor per month in the Netherlands.

Another problem arising from high welfare dependency is that norms associated with work and responsibility have deteriorated in Sweden. It has today become socially acceptable for people to receive government sick leave payments despite being capable of working. And norms are deteriorating most among young people.

The number of Swedes on sick leave is astonishingly high in international comparisons. Swedes eat right, exercise and are amongst the healthiest people in the world. When we see people in their twenties going into early retirement it is part of a phenomenon whereby society attempts to hide true unemployment and many people don’t mind living off social benefits.

There are many reasons to cut Sweden’s taxes: to encourage entrepreneurship and work, to reduce welfare dependency and to create a system more focused on the core functions of the welfare state. The government has already reduced the tax burden, but the reforms must continue. The taxes should at least be cut to a level where the average income earner ”only” pays 50 percent in taxes.

Nima Sanandaji

Swedish Taxpayers Association (Skattebetalarnas Förening)

Nima Sanandaji is also president of Swedish free market think tank Captus and publisher of the weekly online Swedish magazine Captus Tidning.

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OPINION: Sweden’s incredible disappearing climate election 

The campaign so far suggests that Sweden's image as a paragon of virtue on the environment might be at risk, says David Crouch

OPINION: Sweden’s incredible disappearing climate election 

Four years ago next month, a 15-year-old girl sat down on the cobblestones outside parliament in central Stockholm. She refused to go to school until Sweden’s general election that September, to draw attention to the climate crisis.

July 2018 had been the hottest in Sweden since records began 262 years ago, and forest fires had ravaged large parts of the countryside. Greta Thunberg’s school strike gave voice to a pent-up feeling that something must be done to curb global warming.

Within months, she had become one of the world’s best-known figures in the climate debate, leading mass protests for immediate and radical action. 

But this Friday, July 1, Thunberg was back on the cobbles outside parliament with just four supporters, repeating her message of 2018. She might be tempted to ask, after all her campaigning: why doesn’t the climate have a higher profile in this year’s Swedish elections? 

There is every reason for it to do so. According to the latest report from the UN’s International Panel on Climate Change, the world has “a brief and rapidly closing window of opportunity to secure a liveable and sustainable future”. Some damage was already irreversible and ecosystems were reaching the limits of their ability to cope. Their findings were an “atlas of human suffering and a damning indictment of failed climate leadership,” said UN secretary-general António Guterres. 

Sweden’s self-image as a leader on green issues is undermined by recent slippage, delay and prevarication. In 2017, left and right came together to agree that the country should become “the world’s first fossil-free welfare state”, with zero carbon emissions by 2045 and negative ones thereafter. Sweden became the first nation to enshrine this target in law. However, the country is not on target to achieve this goal. In its latest assessment, the Swedish Environmental Protection Agency said more measures would be necessary to prevent progress from slipping further behind on its climate transformation. 

As for other environmental targets that the country committed to achieve by 2020, 15 out of the 16 goals have not been reached. Growth, prosperity and consumption are taking precedence over the environment, researcher Katarina Eckerberg told Dagens Nyheter: “It’s the elephant in the room. No one dares to tell the truth, we are [just] trying to polish the surface a bit.” 

At the party-political level, climate policy seems to have stalled. Since Magdalena Andersson took office in the autumn, the “climate collegium” (klimatkollegium), set up in 2020 as a place for ministers to discuss essential climate initiatives, has not met. Party leaders debated energy and climate in public in early May, but the focus was on the hit to citizens’ pockets caused by rising fuel prices, with left and right united on lowering taxes. What we do for the climate in Sweden won’t bring down the temperature in India, said Sweden Democrat leader Jimmie Åkesson, whose party rejects the 2045 zero-carbon target. The Green Party, who left the government in November, has seen its ratings sink steadily lower in the polls. 

Sweden’s greenhouse gas emissions actually increased by 4% in 2021 – partly because the economy bounced back after Covid, but still a worrying trend. Almost 80% of wind power projects in the country were vetoed by local municipalities, as the kommuner increasingly say no to wind power, putting a spoke in the wheels of Sweden’s green transformation.

This all adds up to climate taking a back seat so far in this year’s general election campaign. This is in sharp contrast to Norway’s “climate election” last autumn, which saw the country’s reliance on oil come in for sharp criticism and success for parties campaigning on green issues. The climate dominated the campaigning in Norway after the IPCC published a “code red” warning on the climate. For Germans also deciding whom to vote for last September, alarming events at home and abroad drove home the urgency of the climate crisis, with deadly heat waves, wildfires and devastating floods that left more the 200 dead.

More recently, the Australian election in May became essentially a climate election, with the victorious centre-left putting climate change and environmental policy firmly back on the agenda. Closer to home, a feature of elections in Denmark and Finland in 2019 was that the climate also enjoyed a profile higher than ever before.

Meanwhile, however, the world seems to be going backwards on the climate. This week, the US Supreme Court ruled that the country’s main environmental regulator has no power to limit greenhouse gas emissions from power plants. Thanks to Russia’s invasion of Ukraine, demand for coal has shot up. Just months after the COP26 climate summit in Glasgow, there is a backlash in business circles against so-called “woke capitalism”, with the idea of environmental investment coming under attack from populist politicians and financiers.

Swedes themselves are consistently well-informed and concerned about the environment. The environment and climate are around fifth on the list of voters’ main concerns, after crime, health, schools and inflation. Immigration and refugee issues, which have long dominated the Swedish debate, are in sixth place, while defence and security – despite the debate over Nato – are down in seventh place, according to an Ipsos poll in June.

But at the polling booth, when it comes to casting their vote, it seems that most Swedes have little faith that political parties will make much difference. Despite the fact that the climate had such a high profile in 2018, the issue did not even end up among the top 10 reasons for choosing a party to vote for, according to polling station surveys commissioned by SVT. Instead, voters feel this is a global problem rather than a Swedish one. “It wouldn’t matter if every Swede held their breath so as not to emit a single molecule more of carbon dioxide – progress would still be negative,” the head of polling company Novus told Svensk Dagbladet last month.

So Sweden seems set to continue to make slow but unspectacular – and even disappointing – progress on the climate in coming years. It would be a shame if the country, with its solid record on the environment and its fondness for grand declarations about the future, were to become a byword for greenwashing rather than a beacon for a better world. Greta and her supporters have work to do here at home.

David Crouch is the author of Almost Perfekt: How Sweden Works and What Can We Learn From It. He is a freelance journalist and a lecturer in journalism at Gothenburg University.