Sweden eyes new round of income tax cuts

Sweden eyes new round of income tax cuts
Sweden's Financial Markets Minister said on Wednesday the country would benefit from further income-tax reductions, as he addressed investors in Stockholm, but added that unemployment was Sweden's "Achilles' heel".

With a bit over a year left until general elections in Sweden, Peter Norman said his government hoped to introduce a fifth reduction to income taxes in Sweden before their current term in power expired.

“There have to be even clearer differences between working and not working,” Norman told Swedish finance professionals at the SvD Investor Summit in Stockholm on Wednesday.

“That’s why we hope to be able to introduce a fifth income-tax reduction if the economy permits it. The Achilles’ heel is unemployment, we need structural reform.”

The Alliance government coalition has spearheaded tax reductions since taking power in 2006, with proponents stating that an increase in disposable income would spur on consumption and growth. Whether or not the reforms would be added to with a fifth income-tax cut was hotly debated at last year’s political conference in Almedalen.

Looking at the many struggling economies worldwide, meanwhile, Norman underscored that Sweden’s relative strength meant the country had a singular opportunity to make investments at home.

“We are unique in the economic world today, because right now we can talk about investments,” Norman said, adding that things were looking up in Europe overall compared to one year ago.

“Our autumn budget included long-term ventures with reduced company tax and investments in education and infrastructure,” he said.

His address at the SvD Investor Summit coincided with an optimistic growth forecast from Statistics Sweden, that outpaced a previous prediction from Reuters.

GDP has already climbed 0.6 percent in the first quarter of 2013, far outstripping the more modest predictions that Sweden would see a 0.3 percent growth in the first three months. The new performance expectation predicted a 1.7 percent growth for the year.

SEB Bank economist Olle Holmgren welcomed the news but told the TT news agency that it was not yet enough for his bank to lower interest rates. He also warned against placing too much hope on the predicted growth rate.

“It shows that Sweden is faring better than the rest of Europe, but the overall picture is still that we will have lower growth than usual this year.”

TT/The Local/at

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