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Reinfeldt warns of opposition tax hikes

TT/The Local · 4 May 2010, 08:28

Published: 04 May 2010 08:28 GMT+02:00

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"Thomas Östros said yesterday that we (the opposition coalition) will not raise taxes for low and middle-income earners. But taxes will be raised for three million wage-earners," said Fredrik Reindfeldt at a press conference on Monday evening.

The main tax effect will occur as a result of a progressive phasing out of a working tax credit for those earning above 40,000 ($5,500) and the changes made to unemployment insurance charges, Reinfeldt argued.

Changes to income taxes were however comparatively marginal with 69 of the 71 billion kronor in tax cuts introduced by the Alliance government left unchanged, a point Reinfeldt argued was noteworthy considering the criticism Social Democrat leader Mona Sahlin had levied at the government on the issue during the mandate period.

Sahlin responded in a televised SVT debate on Monday evening that "the clock can not be turned back", before adding that the "cuts would never have seen the light of day under a Red-Green government".

The prime minister also criticised his opposition counterparts, who announced a total of 24 billion kronor in tax rises on Monday, of "talking about millions but hiding billions."

"The major changes are hidden," he claimed.

"There seems to be a secret person somewhere in the woods from whom money can be extracted."

In the end the taxes are always lumped onto regular income earners, Reinfeldt says.

"Higher taxes do not disappear. When transport costs increase for freight firms then it is levied on the customers, he said.

Reinfeldt saved his most stinging criticism for what he argues is the dismantling of the government's policy for jobs.

Finance minister Anders Borg spoke about a "costs sledgehammer" which he claimed would lead to higher unemployment.

Borg claimed that the the higher taxes on fuel, transport and property, hike payroll taxes for those under 26 and the abolition of the tax deduction for household services (RUT-avdrag), will lead to an increase in inflation from 0.5 to 1.0 percent.

"One percent inflation cuts purchasing power by 15 billion kronor. It is a risky strategy," he said.

Interest rates will increase and for households with average incomes mortgage payments can expect to climb by 5,000-10,000 per annum, Borg claimed.

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The Confederation of Swedish Enterprise (Svenskt Näringsliv) claimed that the "Red-Green" economic policy will cause concern in a slew of sectors, including the transport and forestry industry.

The organisation also expressed opposition to the abolition of the tax deduction for household services, which would impact jobs within the private service sector.

The Swedish Confederation of Professional Associations (Saco) meanwhile welcomed the raised ceiling in unemployment insurance to 930 kronor per day in 2011, but regretted that the budget did not offer hope of a more extensive review of the tax system.

"We would need to be more broad, simple and transparent taxes with fewer deductions and exemptions," Saco chairperson Anna Ekström said.

"Sweden has the world's highest marginal tax rates, and a tougher taxation of income and employment is likely to impact on new jobs," she said.

TT/The Local (news@thelocal.se)

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Your comments about this article

12:10 May 4, 2010 by miss79
sweden is the most affected countries because of the crisis..soon will be join with greece, irland...the money goes to u Reindfeldt ....
12:26 May 4, 2010 by aaww

i am deeply concerned about your comments, why should sweden join greece and iceland? (i assume you said iceland, crisis has nothing to do with irland though)

what i see from the opposition budget, there is nothing new except for future tax increase. sweden has the highest tax level in the entire planet, do you think higher tax will save sweden or kill sweden?

to be simple, i don't think a party that charges private money on government credit card and higher tax level will be any good to sweden, this country need to be more capitalized, meaning lower tax level, brings down the overall cost and create a service sector which will then create jobs for people that are supposed to work and have the ability to work.
12:29 May 4, 2010 by Beavis
I disagree with a lot of Homers policies but hes got it right on this one. If bag woman and her cronies get in they will raise income taxes(they have yet to state which actual taxes they talk about)

An example form above is Ireland who raised income tax by 3% 2 years ago. The unemployement rate went from 6.7% to 13.4% (this was after the world ecomonic crises, unemplyment was 3.6% before)

As well as the hundreds of cleaners being put out of work instantly, the number of people employed in small business will fall rapidly.

All these people would have been paying income tax before, but when bag woman puts them out of a job (as she has promised) They will instead be taking dole thus the government losing the tax money + dole costs.

Raising income tax rates, when they are already almost the highest in the world is just daft!

Raising tax by 3% in Ireland actually caused a tax shortfall of 80billion kr in 2008
13:04 May 4, 2010 by bbeynch
Reinfeldt is correct in warning of the so called "Opposition's" inevitable tax hikes. It is an established fact that the motivation of the left is to hike taxes in the name of income re-distrbution. The idea of raising taxing has been marinating since birth amongst most leftists. In the interest of Sweden's future, government must focus on cutting spending instead.
13:52 May 4, 2010 by tigger007
you all have made good comments,but we all have to remember that socialism and capitolism are tools. we can use them for good or bad and we need to make an honest efford to use them wisely.i'm a capitolistic person,but in american it's gone all wrong like communism went wrong in the soviet union.there should be a middle ground between the two instead of all this political nonsense.
14:13 May 4, 2010 by stenhuggaren
politics is the tool.
08:35 May 5, 2010 by Kronaboy

As I understood it Sweden's national debt for 2009/10 stood at around US$14.7 billion, which granted is a disappointment when compared to $13 billion surplus of 2008; however, this still doesn't detract from the fact that levels of debt in Sweden are well within EU requirements and as far as I am aware Sweden has one of the lowest in the whole of EU. Unless you have some information which might suggest that Sweden (like Greece) has used Goldman Sachs to fraudulently misinform the EU to hide it's true level of debt to ensure membership. I personally think Greece should be kicked out of the EU altogether for the dishonest corrupt manner in which it has missed the EU, and I am absolutely furious that my hard earned taxes are being used to support such a corrupt and dishonest nation.
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