“This is going to mean a lot to many pensioners,” Social Affairs Minister Göran Hägglund told the TT news agency.
The tax reduction will leave every pensioner over 65 with at least 100 kronor more to spend each month starting on January 1st, 2014.
The cuts will come though raising the minimum tax deduction for pensioners, providing the greatest level tax relief to those with lower incomes.
The government estimates a single pensioner with a fixed income will end up with about 1,000 kronor more in disposable income in 2014 compared to 2013.
The tax relief measure unveiled on Monday is 1.35 billion kronor higher than figures previously discussed by the Alliance governing coalition.
“I’m very happy to be able to go from 1.15 billion to 2.5 billion,” Hägglund said.
“It’s going to mean a lot to a lot of pensioners. We know that many live at a very low income level, especially women who are getting on in years.”
The opposition was quick to pounce on the measure, however, with Social Democrat economic policy spokeswoman Magdalena Andersson accusing the government of using tax policy to exacerbate divisions in society.
“The problem is that, despite raising this tax reduction, the government’s tax policy as a whole worsens inequality when it comes to how pensioners and wage earners are taxed,” she told TT, pointing to a fifth round of tax cuts for wage earners expected to be put forward by the government.
“The taxation gap is widening. During Göran Hägglund’s time in the government, these divisions have been implemented and widened and widened and widened. Soon it will happen a fifth time and with borrowed money.”
In contrast, the Social Democrats want to do away with the difference in pensioners’ and wage earners’ taxed bills, a goal that is expected to be costly and one on which Andersson refused to comment.
“We’ll come back to that,” she said.
Meanwhile, the head of Sweden’s National Pensioners’ Organization (Pensionärernas Riksorganisation, PRO) welcomed the tax relief directed toward its members, but cautioned his group was far from satisfied.
“We won’t be happy until the gap between the taxes on pensions and the taxes on wages is gone,” Curt Persson told TT.