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Opposition to end housekeeping tax relief

TT/Peter Vinthagen Simpson · 2 Mar 2010, 11:46

Published: 02 Mar 2010 11:46 GMT+01:00

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The three-party opposition announced their joint position on Tuesday after a meeting with pensioner groups, ending speculation that the issue has divided the Green Party from its coalition partners, the Left and Social Democrat parties.

The Green Party said last week that it would consider keeping the system in place in order to protect jobs. Some Social Democrats have offered support to the Green Party position while Lars Ohly, the leader of the Left Party, has categorically ruled it out.

But now the three partners have agreed that the controversial initiative will be no more if the electorate votes to replace the Alliance government in the autumn.

"If we win the election it will be abolished. There is no doubt about that. The tax relief's formation is unfair and wrong," said Social Democrat leader Mona Sahlin on Tuesday.

Both Lars Ohly and Green Party spokesperson, Maria Wetterstrand, expressed criticism of the system, although Wetterstrand would like to see a discussion over the timing of its abolition.

The Local reported on Sunday that the governing Moderates had launched a campaign to make housekeeping a major issue in the upcoming elections.

While the Moderates and their centre-right coalition partners claim that the so-called "RUT-deduction" is creating thousands of jobs, opposition parties have argued that it only benefits the rich.

The tax relief allows households to deduct half the costs of hiring in services such as cleaning and babysitting.

Prime Minister Fredrik Reinfeldt claimed on Sunday that the scheme had generated 7,000 new employment opportunities.

According to a report from sector organisation Almega 11,400 people are employed within household services, of which half would lose their jobs if it were abolished.

The Liberal Party (Folkpartiet) has announced its ambition to extend the tax relief to encompass more services and to increase it to 75 percent of the cost.

Story continues below…

The chairperson of the Swedish Pensioner's Association (SPF), former Centre Party politician Karl-Erik Olsson, argues that his members have also benefited.

"I am a little surprised over this. It should be able to stay. Many pensioners see it as an opportunity, even if its form can be discussed. It is not particularly unfair and a lot of informal labour has become formal," he said.

The National Pensioners’ Organisation (PRO) chairperson Curt Persson said that the group has no objection to the system but warned that many local municipalities were hiking the cost of needs-assessed home help so that the tax relief made private suppliers cheaper.

"This depletes the public sector," Persson said.

TT/Peter Vinthagen Simpson (news@thelocal.se)

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Your comments about this article

12:48 March 2, 2010 by duncs
what a bunch of useless socialist bastards!
12:55 March 2, 2010 by Localer
i don't understand, what is housekeeping tax relief anyway ? is it if you hired someone to work for you like housekeeping or baby sit and you can get some tax refund from your tax declaration ?
12:59 March 2, 2010 by duncs
@ localer

Exactly! It has created thousands of jobs in the services sector and provided the government with income tax payments beyond what it actually costs to run the scheme. Why would they rather see these people go on benefits?
13:15 March 2, 2010 by Mina08
and its to stop people paying cash for the service...stupid out of date lefty´s
13:22 March 2, 2010 by Rick Methven
When we moved, we where able to employ a woman to clean our old house Officially and claim50% back in tax relief. All the move to stop the relief is going to acheive is that everybady is going to go back to the 'Black' old days.
14:23 March 2, 2010 by MyOpinion
Can somebody explain to me what the left's objection is. Why is it wrong, why do they want rid of it. What do they seek to gain. I was getting ready to vote Fredrik out of office but now I'm wondering. Yes, I do have a vote.
14:38 March 2, 2010 by Glempa
Shortly after Centre-Right won the election, it was discovered that one of the new ministers had been employing a house keeper 'cash in hand' ('black' in Swedish). She resigned from her position, but then the government decided to make this tax deductable. The Left's objection to this is that it only benefits the rich, which is true, and the rest of us have to subsidise this either through taxes or cuts in expenditure elssewhere.

I agree with abolishing this as such tax relief should benefit everyone, not just a few who can afford to pay for this already.
15:12 March 2, 2010 by Nemesis
Create more unemployed in the middle of a recession.

Whoever came up with that idea needs to be sent to a psychiatrist.

Then again the black market, suits the social democrats as a lot of there voters are working black.
15:19 March 2, 2010 by Skåneräv
Glempa, the point is that it does benefit everyone. Perhaps you need these additional household services and you were not able to purchase them before because they were too expensive. Even a babysitter for example you can get tax relief for. This makes previously cash in hand work legal and people pay taxes on their work rather than working in secret.

Now everyone who buys these services can claim 50% of the cost back from their taxes, not just the very rich but everyone. So perhaps still not everyone can afford this even at half the price, but at least a lot more people can afford it than previously.

Concerning the rich, the tax relief is limited to a certain amount per year. The very rich can't go claiming 50% of all their costs so it doesn't mean they can go out and employ a cleaner and a cook instead of just a cleaner as its suddenly more affordable. Then again.... isn't it better that we create more jobs too?
15:20 March 2, 2010 by miss79
yes this housekeeping are only for rich elite people..n most of us well like glempa said..n i do agree to abolish this systems who are meant for only rich people
15:33 March 2, 2010 by Skåneräv
miss79. So having a plumber come and fix a broken pipe or someone replacing a rotten window is not an everyday thing in life, its just rich elite people that do that is it?

" ROT avdrag" is valid for everyday services that everyday people use. Additionally it creates jobs which is pretty important. Read up about it before you agree with social-communist propaganda.
15:39 March 2, 2010 by Lostaussie
It makes no difference in the end. You can get black for around 100/hr or white for 200/hr. The government is better off if you employ black as you can't claim the deduction and the amount of social and tax played is less than the tax paid by a white worker.
16:28 March 2, 2010 by comfortably_numb
Lets way the pros and cons of the current tax relief program:


-Incentive to hire more of the services, creation of jobs

-Reduction of black, cash in hand transactions

-Creation of jobs means more taxes being paid to the government


-Not everyone has a home, or can afford to pay for the services even with the tax relief, so the benefits are leaning more towards the rich

-Decreases the disposable income (saved income) for households, as they are more encouraged to spend than to save - which helps economic growth in the short run but financial health of families is hindered, with more personal debt which is how we got into this financial crisis in the first place.

Anyone has more to add to the above list?

Its a tough call, as I'm more socialist leaning in my political views. Maybe they should abolish babysitting, and housekeeping part of the relief but keep the home repair services portion to be more fair to everyone.
17:56 March 2, 2010 by Mib
At what point to say someone is rich.....? 20,000, 30,000, 40,000, 100,0000 p/m income? I know people who employ a cleaner who are far from rich, but it's cheap enough for them to use that service as both of them are working plus have children.

It's very simple, no tax relief and people will pay cash in hand and the cleaners will pay no tax, so the Government/taxpayers loses out. Make it legitimate with tax relief and hey presto, more cleaners will officially pay tax. So, even in the lefty view, the rich will still benefit...it's just they will pay in cash, but the taxpayers will lose as the cleaners will go onto the black market.

Shall we start taxing Cappucino's, cause it's a coffee that wealthier people are more likely to drink? Common sense should prevail!! And you know what....the same Lefties who want to get rid of it...actually have cleaners and claim back the tax relief. If they followed their ideals, they would NOT claim the tax relief back!!
18:39 March 2, 2010 by Renfeh Hguh
I am about to get a builder and painter to do some work in my apartment and we will will be taking advantage of this tax relief. When I first talked to the builder (friend of a friend) over a few beers 9 months ago we discussed doing it black.

If the opposition get to power and drop this tax relief then we should expect to see AC/DC's Back in Black in the Swedish charts again :)


How does this lean to the rich? Do rich people only employ rich people to do the work?
19:50 March 2, 2010 by comfortably_numb
Renfeh, I was perhaps unclear, but my suggestion was to drop the babysitting and housecleaning portion of the relief, and keep the repair/homecare part. Services that are more of a "luxury" (this term is subjective and definition could be perhaps made by looking at Stats, poverty line etc) can be perhaps dropped from the program as those households who want to use them usually have enough money already to pay for them and will do so even without the relief.

Perhaps your painter friend will charge you more now anyway since your not doing it black? So it works out same for both of you. Except now govt knows about it.

@Mib, Not saying we should be taxing Cappucino's, but we shouldn't provide tax relief only for those who can afford to buy them.

I'm not against this tax relief policy, but I think it could perhaps be altered to provide benefit for all...and more perhaps for those who actually need it.
20:23 March 2, 2010 by Skåneräv
In 2008, 71% of people using this tax relief were low or average income earners. (24.6% low income, 46,6% medium income).

20:47 March 2, 2010 by comfortably_numb
Thanks for the link Skåneräv, very interesting "spread" of numbers, although as the article suggests 29 percent had an income over 500,000SEK. Which, considering there are far less people earning that much, they have a stronger representation than the numbers tell.

Nonetheless, it is not as "unfair" as the left left coalition is claiming. A little tweeking and this policy should stay I think.
21:24 March 2, 2010 by cardoboy
I'm not rich but I benifit from this tax relief.

I run a small business that provides a service that my customers can claim relief for. This makes up about 50% of my business. I'm sure I'll lose a lot of customers if they do away with this relief as most of them aren't rich either.

I try very hard to conduct all my business above board, this relief enables me to provide a affordable service at a price that normal earners can afford. Doing away with it and only the rich will be able to afford it.
09:49 March 3, 2010 by salalah
Does this mean that prior to the tax relief, a lot of homes were dirty?
15:04 March 3, 2010 by rumcajs

Are you sure? I ask because it's a refound. It's not that you take less money out of your poket.

I don't know the prices cos I've never used these things and I've never worked in it, but if I'm on the border of "CAN-CANNOT", I don't care that much if I'll have some money back LATER cos I have to pay you NOW anyway.

I don't think it makes a big difference for people who can easy afford it to get 1000 more 1000 less at the end of the year. I think they hire you just because they are lazy to clean (I'm lazy too and would do it if I could) not because of the taxes.

Might be wrong... you should now more.
20:31 March 3, 2010 by cardoboy
I would lose customers because at the moment if I charge a customer for example 3000kr for a treatment I only bill them for 50% (1500kr) of this and then apply to Skattverket for the rest. I'm sure that you'd agree that paying 1500kr compared to 3000kr makes my service alot more affordable.

I personally think there are better ways then this " ROT-deduction" to help create job. For instance rather then having to pay approx 50% income tax then 25% moms from almost the first kronor they earn why not reduce the tax rate for self-employed people to say 30% and only require them to be moms registered if they earn over a certain amount.

This would mean if a self employed person wanted to make 200kr a hour after tax would have to charge the customer 260kr instead of 500kr as the tax laws are now.
10:37 March 5, 2010 by Rebel
I plan on moving from Sweden in the future, and taking my children with me -- well, except for my two sons in collge who will probably marry Swedes and bring them with them to the USA as well eventually.

Almost feel tempted to vote for the far left alliance just to stick it to everyone still here.
14:46 March 6, 2010 by Markus D
These are very interesting posts!

I get the impression that there are a lot of voters out there who are beginning to "see through" the stupid policies of the left-wing parties.

I guess even the traditional socialist-voters are realising that their old parties are completely out of touch with reality!

Let´s give Reinfeldt a decent majority in September so that he can get some more important changes done to make our country a better one to live/work in.

Anyone disagree with this suggestion?
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