Swedish government and Sweden Democrats propose fuel tax cuts

The Swedish right-wing government and the Sweden Democrats have dedicated 6.7 billion kronor to tax cuts on fuel in a new budget, following up on election promises to lower petrol and diesel prices.

Swedish government and Sweden Democrats propose fuel tax cuts
File photo: Christine Olsson/TT

The proposed cuts would mean a decrease of one krona per litre at the pump from January 1st, 2023.

It consists of a further cut to the temporary energy tax cut on petrol and diesel which was already in place, meaning taxes on fuel will go down to 80 öre per litre, as well as a cut on VAT.

The Sweden Democrat economic spokesperson Oscar Sjöstedt said that the package of fuel cuts his party is proposing alongside the government includes three posts.

These are an increase in the travel rebate offered to those driving to work in their own car from 18.50 kronor to 25 kronor per 10km, a decrease of the “reduction obligation”, the rule that fossil fuels must be mixed with more expensive biofuels, to the minimum EU level (resulting in a 4-5 kronor price decrease per litre of fuel), and this 80 öre per litre fuel tax cut.

Despite these measures, this is still a long way off election promises made by the Sweden Democrats, who promised a 10 kronor cut on the price of diesel and a 6.50 kronor cut on the price of petrol.

The Moderates and Christian Democrats – two of the parties in government – also promised to cut fuel prices during the election.

“I would have liked to go a little bit further on this, even though this is the single largest investment we’re making in our budget proposal,” Sjöstedt said.

It’s an expensive post – the proposal being put forward is expected to cost the government 6.7 billion kronor next year.

“At the same time, in a situation where inflation is almost in double digits, it’s dangerous to pursue an expansive fiscal policy. If anything, it should be contractionary,” he said.

He explained that the budget proposal will be neutral, with a slight focus on tighter finances. He did not comment on how the tax cut would be funded.

The budget will be presented on November 8th.

Increased emissions

The tax cut is likely to increase Sweden’s carbon dioxide emissions as the price drops and demand increases.

“That could happen,” Sjöstedt said, “But at the same time the situation is unsustainable. We can’t incapacitate our own households and companies.”

“The world doesn’t benefit from us being worse off.”

There will be “quite significant” measures in the other direction, Sjöstedt said, mentioning a measure in the previous right-wing budget about investing in charging posts for electric cars.

Sweden has also been given approval from the EU Commission to introduce a three-month temporary further cut on energy taxes during November, December and January. That opportunity is open to the government, if they choose to take it.

On October 1st, a tax cut equal to a 1.30 kronor cut on at-pump fuel prices also expired.

Sjöstedt said there could be further tax cuts in the future, depending on how high energy prices are.

“Definitely,” he said. “We have checkpoints every year where we see the direction prices on the global market are heading.”

“This is a parameter completely out of our control, which is basically impossible for the government to influence.”

“If diesel prices were at 13 kronor, I wouldn’t start negotiating huge tax cuts because there would be no need,” he added.

The government is aiming to implement the decrease in the reduction obligation – mixing biofuels into petrol and diesel – to the EU’s minimum level in 2024.

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Sweden plans international campaign to promote migration ‘paradigm shift’

In a joint press conference, Moderate Migration Minister Maria Malmer Stenergard and Sweden Democrat parliamentary group leader Henrik Vinge announced the campaign, which they hope will discourage refugees from coming to Sweden.

Sweden plans international campaign to promote migration 'paradigm shift'

The “international information campaign” will promote the “paradigm shift” currently taking place in Swedish migration policy, and will be aimed at foreign authorities and other authorities working internationally, Malmer Stenergard said.

“In the long run, the goal is that fewer people will come here,” she said.

The campaign will also target foreign media and foreign embassies in Sweden.

“Currently, two thirds of those coming to Europe do not have a valid reason for protection,” Malmer Stenergard said. “Many of them will be forced to return, and even more so under this government and collaborating party [the Sweden Democrats].”

Sweden’s current government consists of the Moderates, Christian Democrats and the Liberals, with the support of the Sweden Democrats, who are not in government. Its policy document, the Tidö Agreement, is co-authored by all four parties and covers seven different policy areas, of which migration and integration is the largest.

“Many migrants place their lives in the hands of refugee smugglers, and will still have to return later. If they receive information on which rules apply here, we’ll reduce the risk of suffering for these people and can focus on those who actually need protection to a greater extent,” said Malmer Stenergard.

The message of the campaign will focus on informing people in other countries of planned changes to Sweden’s migration policy, which will include tighter rules for family reunification, stricter maintenance requirements and stricter rules for citizenship, she explained.

The number of refugees arriving in Sweden increased in 2022 to 17,000, compared to 11,000 the year before, but down from around 21,000 in 2019.

“In particular, I think this measure is important in the short-term to lower the pressure of asylum seekers on Sweden,” Henrik Vinge, the Sweden Democrat parliamentary group leader, said.

The plan so far is not to take out advertisements in foreign newspapers, for example, with the government instead hoping that information will spread by word of mouth.

“You can’t underestimate how quickly information can spread by word of mouth,” Malmer Stenergard said. “That’s why we need to work broadly, both through authorities but also through the media. After that, we believe it will spread naturally.”

Many of the proposed measures in the migration and integration section of the Tidö coalition agreement specifically target asylum seekers, including the goal of lowering the number of asylum seekers accepted per year to the lowest possible level under EU law, making it possible to withdraw residence permits for asylum seekers who are no longer in need of protection, abolishing permanent residence permits for asylum seekers, and “return migration” programmes to encourage asylum seekers to return to their countries of origin.