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Few changes in price after restaurant tax cut

Joel Linde · 4 Jan 2012, 12:23

Published: 04 Jan 2012 12:23 GMT+01:00

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The government invested billions of kronor in a controversial move to reduce taxes for the restaurant business, and many Swedes saw this as their chance to afford a few more visits to eateries countrywide.

But according to a survey by the Sveriges Television regional news programme Östnytt, that might just have been wishful thinking.

The survey found that only six out of 26 restaurants in the area had lowered their prices, and that a mere seven were planning to hire more staff.

And when newspaper Metro did a similar survey, they found that only three out of the 30 restaurants they visited had lowered the prices on their menus after the new tax rules were put into effect.

Björn Lundell at the Swedish Hotel and Restaurant Association said the numbers are disappointing.

"It's not nearly enough," he told SVT.

"We encourage all our members to make the most of this tax reduction."

So far this seems to be limited to larger corporations such as fast food restaurants McDonalds and its Swedish counterpart Max, which have both lowered the prices on their menus and are also looking to hire.

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But there is still hope for Swedes who wish to save a few kronor on eating out, Lundell said.

"We are asking everyone to have some patience. It's only been a few days since the new tax was introduced," he told Östnytt.

Joel Linde (news@thelocal.se)

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Your comments about this article

14:51 January 4, 2012 by bravedave
This was always going to happen. Stupid idea really. Great for restaurants pocketing the extra cash and bad for the consumer forking out lots of kronor still.
14:56 January 4, 2012 by Åskar
Why am I not surprised?
15:01 January 4, 2012 by Grindsprint
In time this cut will reflect on your restaurant bills. Take it easy
15:08 January 4, 2012 by Keith #5083
always a very competitive branch this tax cut may reflect in many ways: better service, better quality raw materials, even reduced prices eventually. We can't really blame owners for not instituting reductions immediately, maybe they need a capital cushion to ensure they can keep running - it's not been an easy couple of years for them and we'd soon moan if we had no places to go to.

Frankly, watching the way many folks spend money, I am surprised that anyone notices.
15:08 January 4, 2012 by Brtahan
the most stupied idea ever , less tax means less service to citizens , who are effected by these tax cuts? , the eldery , the young , the ill, the poor etc ofcourse not the rich . Tax cuts leads to bad service in schools,hospitals long waiting , for operations due cuts in staff . eldery are the most neglected in this case because they rely on the govt for taking care of them ! less tax =less ppl employed , in all the govt sectors . keep up the capitalism!!! well done ...
15:23 January 4, 2012 by ironman294
Tax cuts are effective. Lower VAT is a good idea. If the restaurants do what they are supposed to do and lower prices. People will come more often and spend more, which means even more tax Kroners going back to the government to spend on the dead beat lazy bums who study 10 yrs of college and collect government welfare.

Much like the lazy bums who will not go out and get a job and live off welfare with their spouse and complain about how rotten everything is in the country.
15:47 January 4, 2012 by Scepticion
Not unexpected. And I think prices will not get lower. However, there probably will be an indirect benefit. Those places that had a hard time staying open, will have it easier now, fewer bankruptcies, jobs saved, more people paying taxes. Further, the ROT worked, because suddenly it was worth hiring people normally instead of black, it seems everybody profited, more work, and probably no lost taxes, because more declared taxes. I hope it also opens now the door for reducing the amount of black work in the restaurants, which then will make up for some of lost taxes.

Further, many people in small places probably made a lousy income and just managed to hang on despite hard work. More income for them means also more income taxes and pension money. So, combined with more tax controls, it may improve the restaurant landscape. We have to wait and see.
16:06 January 4, 2012 by jvtx3232
There are three very nice looking girls in the photo accompanying this article.

16:35 January 4, 2012 by Great Scott
Well wasn't this obvious from the very start, yes Sweden's incompetent government has done it again, given even more money to those who don't need it. When are those who were stupid enough to vote for this self centred bunch of clowns going to wake up? Healthcare standards are now almost the worst in Europe, unemployment going up when is it going to stop.
16:54 January 4, 2012 by Grindsprint
It will lower the prices in one way or another, either by price reductions or by better quality/service. This will lead to higher demand for these services and thereby the restaurant industry will employ more people and Sweden has a little less unemployment. This is a good thing, regardless if someone here and there is making a buck on it. the jealousy whenever something seems to in one way or another benefit "the rich" is astonishing! Here we have a way to create more jobs, but what people care about is the terrible effect that it´s the better off that eat out the most, and since they will be getting slightly better service or slightly cheaper food, we gotta hate the idea
17:04 January 4, 2012 by star10
How responsive are restaurant prices at the margine (to cost reductions in input prices)? Ask the economist. He will come up with "elasticity of restaurant demand with respect to price". The figure tells you by how many percent restaurant demand increases if you decrease the price by 1 percent. If you don't know that figure, it is not possible to figure out whether tax cuts will have meaningful impact on restaurant prices.
17:29 January 4, 2012 by Scepticion

Well, the government tax office should see what happens. Will tax income drop, will employee numbers rise, will more turnover be reported. All this stuff should be pretty public here in Sweden, so in two years one can draw a comparison before and after. As to restaurant owners becoming rich, perhaps some, the guys in Stureplan, but overall it's not a hugely profitable branch, many small ones keep going under or change hands.
17:38 January 4, 2012 by Great Scott
After reading some of the comments made, I can't believe how gullible some people are and actually believe prices will go down. The report basically says that the government has wasted billons of kronor, total incompetence.
18:04 January 4, 2012 by bjorkon
I can't believe that there are so many people in these comments sections just moaning. Having moved here from UK about a year ago it has been a great pity to see how few options outside central stockholm there are for eating out. Swedes just love to picnic, fika and anything else except go out to eat. Changing that is going to take time. The point is, it just got more profitable to open a restaurant. The guys who are not reducing there prices today can enjoy a little extra cash for the time being, but if this experiment works there will be new comptitors coming.

If you can't stand the thought of people making money from you when you eat out, then it's simple. Don't bother. Tax is the up-side, and if people don't go out to eat at all there will not be any money or jobs in the restaurant business or tax for the miserable moaning money grabbing lazy inhabitants of this country.
21:40 January 4, 2012 by Grokh
just goes to show, businesses complain, and when they get what they want they want more.
03:49 January 5, 2012 by Marc the Texan
Seems like some people want instant results. That's not how markets work. It takes some time before competition between restaurants decides where the savings will go based on many factors. As soon as some restaurants feel able to lower prices in order to gain market share, other restaurants will feel the pressure and have to respond with their own incentives. A lot of moving parts are in play, but customers will pay less over time for the restaurant experience.
08:38 January 5, 2012 by Reason abd Realism
Would be helpful if the media published and updated a list of restaurants that HAVE lowered their prices, so that informed consumers can take more of their business there.
09:46 January 5, 2012 by RobinHood
It has been five days since this tax cut was introduced, and one of those was a red day. Restaurants will not feel the benefit until they pay Januarys VAT bill, due in March.

I think everybody needs to calm down somewhat. It won't be until at least the summer before the effect can be fairly judged.
10:48 January 5, 2012 by Rick Methven

Our local paper did a survey of local restaurants and found only a couple of fast food places intended lowering prices. One restaurant owner was quoted as saying "price reduction is for amateurs" In his place the average cost of a meal excluding wine is 500kr so he stands to make 65kr more profit from every customer. If he serves around 20,000 customers a year he stands to clear an extra 1.3 million kr a year or around an extra million net profit
12:35 January 5, 2012 by KungsholmenGuy
@ Rick Methven

Did the paper publish the names of restaurants that HAVE lowered their prices? As post 17 says, would be good for consumers to know this, so that we can take our business there. If the paper did supply a list, can you tell us the name of the paper and the day that it was published?

The favorable publicity may speed up the introduciton of price reductions by other owners who intend to lower their prices at some point.
12:44 January 5, 2012 by the fonz
I Totally agree with #20.

I would certainly take my business to the restaurants that had played fair and avoid the others if I knew which ones they were.

Come on The Local - publish a list please.
13:36 January 5, 2012 by Bigd

I count one! And whats that got to do with the tax cut?
15:04 January 5, 2012 by engagebrain
1) perhaps many were not actually bothering to pay VAT

2) would prefer to make more profit - surprise, not really.
15:13 January 5, 2012 by Rick Methven

The local paper is Corren (corren.se) Only Max, McDonalds and Burger King said they had lowered prices. Apart from the tapas bar owner who thinks price cutting is for amateurs ( now on my black list) all other places interviewed said they had not decided. TV4 Ostnyt did a county wide investigation and found 6 in Östergotland that are going to lower prices. In the end it will come down to competition, if one reduces prices, then others nearby who are considered competitors will be forced to follow. The Tapas bar owner should have kept his mouth shut
19:53 January 5, 2012 by Syl13
This measure was made in France and in belgium, without lower prices. In an atmosphere of uncertainty, I'm not sure that it will make people hire new employees. But yes itcould avoid some bankruptcies and protect employees.
22:55 January 7, 2012 by kenny8076
i have taken my girl out twice since i have lived here 2 years. i refuse to pay so much for such mediocre food. a restaurant here costs me and her about 500 krowns for food i would expect off of an appetizers menu at a T.G.I.F. or Ruby Tuesdays..... i have never got used to how much they charge for processed food here. Yet the Swedes go out like its nothing...... If anyone has every been to Harrys in Karlstad and ate their 175 krown piece of meat on a bun they call a hamburger with the 7 potato wedges i hope you made it out of the hospital ok!!!

me and my friend from the states also have been trying to learn how it works here with how they charge so much for such low quality food and service. We have come to the conclusion its that way because Swedes settle for it. Perhaps they dont know any better. I dont know enough about the taxes to know why they charge so much but NOTHING is homemade here, all the restaurants in karlstad throw pre bought/ made burgers on the grills and heat them up (Harry's)

long story short i went back stateside for the past thanksgiving and did NOTHING but eat quality food for competitive great prices....... I also understand why Swedes are skinny.... its not that they work out and CARE about their health, they cant afford to go out and eat or go to the grocery store and buy tons of great meat and products, i barely buy anything from ICA and never walk out with less than 1000 krowns tab! in the 2 years i was here i have lost around 25 pounds and im trying desperately to get it back without going bankrupt!!
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