• Sweden's news in English

Sweden in new round of cut taxes to boost employment

AFP/The Local · 19 Sep 2009, 14:30

Published: 19 Sep 2009 14:30 GMT+02:00

Facebook Twitter Google+ reddit

Prime Minister Fredrik Reinfeldt and three other ministers in the four-party coalition said the reduction would mean most wage earners would have 200 to 250 Swedish kronor more in take-home pay every month.

The proposal, to be presented to parliament on Monday as part of the 2010 budget bill, is the fourth leg of a tax cut programme introduced in January 2007 to stimulate employment.

The fourth leg would enter into force on January 1, 2010.

With that step, 99 percent of full-time employees will have had their taxes reduced by a total of 1,000 Swedish kronor per month, while 75 percent will have had reductions of 1,500 Swedish kronor, the government said.

"The coalition government has agreed on reforms for jobs and entrepreneurship that will increase employment in the long-term. It has to be more profitable to work and more companies should be able to hire employees," the government said.

Since coming to power in late 2006, the government has launched a series of measures aimed at inciting Swedes to return to the job market instead of living off of state subsidies.

Story continues below…

But instead of declining Sweden's unemployment rate has risen, from 5.7 percent in August 2006 to 8.0 percent in August 2009. Much of the increase has been attributed to the international economic crisis.

The government said it would also propose a series of measures in the budget bill aimed at boosting incentives to start companies and improve the business climate.

AFP/The Local (news@thelocal.se)

Facebook Twitter Google+ reddit

Your comments about this article

16:26 September 19, 2009 by Greg in Canada
The theory is by cutting taxes people have more disposable income and this creates more jobs.

Sweden's tax system seems to me to be a bit of an oddity with a relatively low corporate tax rate but has very high personal taxes on the middle class.

Here's how Sweden compares to the rest of the world. If comparing to Canada on this chart you have to ad the federal and provincial taxes together to get personal income tax.

18:10 September 20, 2009 by henry.bn
All labour-related taxes effectively function as a payroll tax. It is the employer who pays. Ultimately, the employer is the customer, from whom the money must come in the first place.

It would make no difference if employees were paid their net wages and the tax openly charged as such.What counts is what happens at the margin ie when people are unemployed. The minimum price of labour is, broadly speaking, equal to the amount that an employer will pay so that an unemployed person will end up no worse off than on benefit. Otherwise they cannot afford to go to work!

This is why workers tend either to be replaced by machines, or the work does not get done at all, or it goes to a third world country.

The tax system is a disaster. Cuts in taxes on wages will tend to reduce unemployement be reducing the cost of labour to employers. Better still, get rid of them altogether so that the minimum cost of labour is no more than someone will receive in unemployment benefit.

How to pay for public services? Tax the rental value of land instead (markvärdesavgift). This does not discourage economic activity. On the contrary, it promotes it.

09:47 September 21, 2009 by nzroller
I agree with @henry.bn, taxing work is not good as it creates a disincentive to hire, and generally speaking work is a "good thing".

A land-use tax is appealing because most of the time added value to (urban) land is really improvements to the structure above it (property). The distinction between "land" and "property" is important because improving property is also a good thing.

Additionally, one should tax "bad things" -- stuff that's bad for us or society when over-consumed -- like petrol, car use in cities, roads, drugs and even fat. Such taxes go some way to correct market failures and don't depress the economy.

To be clear the goal is not to "cut tax revenue", but rather a comprehensive tax reform which shifts taxing away from "good things" and onto "bad things".
Today's headlines
Here's how slow Sweden's high-speed trains are getting
A Swedish SJX2000 high speed train. Photo: Tomas Oneborg/SvD/TT

The high-speed rail journey between the three biggest Swedish cities is about to get longer.

The Local List
12 Swedish words with just awesome literal translations
A filthy-minded lobster, i.e. a snuskhummer. Photo: Gorm Kallestad/NTB scanpix/TT

One of our favourite things about the Swedish language is its wonderful compound words, which range from being utterly bizarre to making perfect sense.

US election
Donald Trump won't get new Ericsson head's vote
Trump pictured at a campaign rally in Florida. Photo: Evan Vucci/AP

The new Swedish-American boss of telecoms giant Ericsson has revealed he will not vote for the Republican nominee in the forthcoming US presidential election.

Swedes named fourth most gender equal in the world
A file photo of men and women pushing prams in Stockholm. Photo: Claudio Bresciani/TT

Sweden has closed 81 percent of its overall gender gap according to the World Economic Forum.

Sweden: Russian warships in the Baltic 'worrying'
Swedish Defence Minister Peter Hultqvist. Photo: Vilhelm Stokstad/TT

Two Russian warships equipped with long-range missiles have entered the Baltic Sea after passing Denmark.

Why businesses are worried about Sweden's drone ban
A drone filming in Stockholm. Photo: Pontus Lundahl/TT

The Local investigates what Sweden's new drone ban could mean for businesses in the country.

This is the new top boss of Swedish Ericsson
Börje Ekholm. Photo: Magnus Hjalmarson Neideman/SvD/TT

Telecoms giant Ericsson has appointed a new CEO after a turbulent year for the company.

These are Sweden's best universities: ranking
A new university ranking has been released. Photo: Cecilia Larsson Lantz/Imagebank.sweden.se

At least according to this global ranking, which picks 12 Swedish universities among the top-1000.

Swedish pharmacies restrict paracetamol sales for teens
The move is intended to cut paracetamol overdoses. Photo: Nora Lorek/TT

Sweden's pharmacies are banning teens under 18 from buying more than one pack of pills at a time.

Rwandan genocide suspect held in Sweden
A memorial centre in Kigali, Rwanda. Photo: Ben Curtis/AP

A man has been arrested in Sweden suspected of involvement in the 1994 Rwandan genocide which claimed 800,000 lives.

Sponsored Article
Stockholm: creating solutions to global challenges
Sweden cuts 2016 refugee forecast
Sponsored Article
Last chance to vote absentee in the US elections
Is Game of Thrones coming to Sweden?
Property of the week: Kungsholmen, Stockholm
Blog updates

6 October

10 useful hjälpverb (The Swedish Teacher) »

"Hej! I think the so-called “hjalpverb” (auxiliary verbs in English) are a good way to get…" READ »


8 July

Editor’s blog, July 8th (The Local Sweden) »

"Hej readers, It has, as always, been a bizarre, serious and hilarious week in Sweden. You…" READ »

Sponsored Article
This is Malmö: Football capital of Sweden
Will Swedes soon be looking for fairtrade porn?
Sponsored Article
Where is the Swedish music industry heading?
The Local Voices
'I simply don’t believe in nationality'
Why we're convinced Game of Thrones is based on Sweden
People-watching: October 21st-23rd
Sponsored Article
Why you should 'grab a chair' on Stockholm's tech scene
Fury at plans that 'threaten the IB's survival' in Sweden
Sponsored Article
Swedish for programmers: 'It changed my life'
Analysis & Opinion
Are we just going to let half the country die?
Angry elk chases Swede up a lamp post
Sponsored Article
Top 7 tips to help you learn Swedish
The Local Voices
'Alienation in Sweden feels better: I find myself a stranger among scores of aliens'
Sponsored Article
‘Extremism can't be defeated on the battlefield alone’
People-watching: October 20th
The Local Voices
A layover at Qatar airport brought this Swedish-Kenyan couple together - now they're heading for marriage
Sponsored Article
Stockholm: creating solutions to global challenges
Swede punches clown that scared his grandmother
Sponsored Article
Why you should 'grab a chair' on Stockholm's tech scene
Fans throw flares and enter pitch in Swedish football riot
Sponsored Article
Where is the Swedish music industry heading?
Could Swedish blood test solve 'Making a Murderer'?
Sponsored Article
One expat's strategy for making friends in Stockholm
Swedish school to build gender neutral changing room
Sponsored Article
Nordic fashion in focus at Stockholm University
People-watching: October 14th-16th
Man in Sweden assaulted by clowns with broken bottle
Nobel Prize 2016: Literature
Watch the man who discovered Bob Dylan react to his Nobel Prize win
Record numbers emigrating from Sweden
People-watching: October 12th
The Local Voices
'Swedish startups should embrace newcomers' talents - there's nothing to fear'
How far right are the Sweden Democrats?
Property of the week: Triangeln, Malmö
The Local Voices
Syria's White Helmets: The Nobel Peace Prize would have meant a lot, but pulling a child from rubble is the greatest reward
jobs available