Politics in Sweden: Are the Moderates leading a 'socialist government'?
An announcement this week to pause an automatic tax cut for high earners to finance a tax cut for low earners raised eyebrows among Moderate party colleagues this week, some of whom accused the government of pushing Social Democrat policies.
In a press conference on Monday, Prime Minister Ulf Kristersson and Finance Minister Elisabeth Svantesson, both Moderates, teased a somewhat unexpected policy from the government's new budget which will be revealed later this month, agreed in collaboration with the Liberals, Christian Democrats and the Sweden Democrats.
The policy in question was twofold. Firstly, the government is planning to increase the jobbskatteavdrag, a tax cut which benefits all workers, but primarily those earning around 38,000 kronor or less.
A couple who are each earning the minimum salary under trade union Kommunal's collective bargaining agreement, 20,220 kronor per month, would pay 5,600 kronor less tax each year under the new policy, while a family consisting of a police officer and a nurse would pay 14,000 kronor less in tax.
But here's the interesting part. This tax cut would cost the state around 11 billion kronor. So how are they going to finance it?
Simply put, they're going to take from the rich and give to the poor, like modern-day Robin Hoods – not, perhaps, a policy you would expect from the right-wing Moderates.
"We're making sure that those on low and medium incomes will have more left after tax," Kristersson said in Monday's press conference.
Essentially, the government is going to pause an automatic hike in the threshold at which high-earners in Sweden are liable to pay national tax.
Currently, you're only liable to pay this tax – 20 percent on all income over the threshold – if you earn over 51,000 kronor a month. According to estimates from Swedbank economist Madelén Falkenhäll, around 800,000 people paid this in 2023, compared to 1.2 million in 2022, when the threshold was just 46,000 kronor a month.
From the turn of the year, an automatic adjustment to national tax due to Sweden's high inflation rate was due to kick in, which would have raised this threshold from 51,000 kronor a month to 57,000 kronor, further cutting the number of people liable to pay national tax to around 650,000 in 2024.
The adjustment wouldn't just have meant that those earning between 51,000 and 57,000 kronor would no longer need to pay national tax, it would also have been a tax cut for anyone earning above the threshold, as they would only have been liable for national tax on their earnings above the new, higher threshold.
Taxpayers in the latter group would have had a tax cut of over 1,100 kronor a month if the adjustment had gone ahead.
By choosing not to raise this threshold for high earners, the government will generate an extra 12 million kronor in tax income, which it will pass on to those earning considerably less.
This has raised eyebrows among Moderate party colleagues and commentators, some of whom have accused the government of being a sosseregering, or Social Democrat government.
"I thought we had a right-wing government which was working to improve economic freedom for everyone who works," the Moderates' former party secretary Kent Persson wrote on X, the social media formerly known as Twitter.
"Actively making it pay less to work does not chime well with Moderate policies," he said.
Fredrik Kopsch, head economist at Swedish free-market think tank Timbro, described the policies in a post on X as "insane".
"Whatever you vote for you get a sosseregering," he wrote.
The criticism doesn't seem entirely misplaced, either, as the Social Democrats did actually propose a similar policy at the end of August.
So what's going on behind the scenes?
It looks like the Moderates' change of heart could be down to pressure from the Sweden Democrats, the largest party in the right-wing bloc, and the party upon whom the government relies for support.
"If you're going to prioritise in this economic situation, I and the Sweden Democrats believe that we should prioritise tax cuts for people with more normal incomes, or even low incomes, as this money is used in a different way," Sweden Democrat party leader Jimmie Åkesson told TV4 in an interview last week.
"I think that would be better."
The Sweden Democrats, despite not being in government, have considerable power over the Moderates, and could essentially topple the government if they chose to withdraw their support. They've already shown their negotiating skills by managing to effectively get their entire migration policy in to the coalition agreement, and aren't afraid to threaten to break ranks if they don't get what they want.
Coalition party the Christian Democrats, who are in government, were also apprehensive of raising the national tax threshold, according to Svenska Dagbladet newspaper, prioritising welfare and shorter healthcare queues over tax cuts for the rich.
Once again, the cracks between the four parties currently in charge of running the country are showing.
Politics in Sweden is a weekly column looking at the big talking points and issues in Swedish politics. Members of The Local Sweden can sign up to receive an email alert when the column is published. Just click on this “newsletters" option or visit the menu bar.
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In a press conference on Monday, Prime Minister Ulf Kristersson and Finance Minister Elisabeth Svantesson, both Moderates, teased a somewhat unexpected policy from the government's new budget which will be revealed later this month, agreed in collaboration with the Liberals, Christian Democrats and the Sweden Democrats.
The policy in question was twofold. Firstly, the government is planning to increase the jobbskatteavdrag, a tax cut which benefits all workers, but primarily those earning around 38,000 kronor or less.
A couple who are each earning the minimum salary under trade union Kommunal's collective bargaining agreement, 20,220 kronor per month, would pay 5,600 kronor less tax each year under the new policy, while a family consisting of a police officer and a nurse would pay 14,000 kronor less in tax.
But here's the interesting part. This tax cut would cost the state around 11 billion kronor. So how are they going to finance it?
Simply put, they're going to take from the rich and give to the poor, like modern-day Robin Hoods – not, perhaps, a policy you would expect from the right-wing Moderates.
"We're making sure that those on low and medium incomes will have more left after tax," Kristersson said in Monday's press conference.
Essentially, the government is going to pause an automatic hike in the threshold at which high-earners in Sweden are liable to pay national tax.
Currently, you're only liable to pay this tax – 20 percent on all income over the threshold – if you earn over 51,000 kronor a month. According to estimates from Swedbank economist Madelén Falkenhäll, around 800,000 people paid this in 2023, compared to 1.2 million in 2022, when the threshold was just 46,000 kronor a month.
From the turn of the year, an automatic adjustment to national tax due to Sweden's high inflation rate was due to kick in, which would have raised this threshold from 51,000 kronor a month to 57,000 kronor, further cutting the number of people liable to pay national tax to around 650,000 in 2024.
The adjustment wouldn't just have meant that those earning between 51,000 and 57,000 kronor would no longer need to pay national tax, it would also have been a tax cut for anyone earning above the threshold, as they would only have been liable for national tax on their earnings above the new, higher threshold.
Taxpayers in the latter group would have had a tax cut of over 1,100 kronor a month if the adjustment had gone ahead.
By choosing not to raise this threshold for high earners, the government will generate an extra 12 million kronor in tax income, which it will pass on to those earning considerably less.
This has raised eyebrows among Moderate party colleagues and commentators, some of whom have accused the government of being a sosseregering, or Social Democrat government.
"I thought we had a right-wing government which was working to improve economic freedom for everyone who works," the Moderates' former party secretary Kent Persson wrote on X, the social media formerly known as Twitter.
"Actively making it pay less to work does not chime well with Moderate policies," he said.
Fredrik Kopsch, head economist at Swedish free-market think tank Timbro, described the policies in a post on X as "insane".
"Whatever you vote for you get a sosseregering," he wrote.
The criticism doesn't seem entirely misplaced, either, as the Social Democrats did actually propose a similar policy at the end of August.
So what's going on behind the scenes?
It looks like the Moderates' change of heart could be down to pressure from the Sweden Democrats, the largest party in the right-wing bloc, and the party upon whom the government relies for support.
"If you're going to prioritise in this economic situation, I and the Sweden Democrats believe that we should prioritise tax cuts for people with more normal incomes, or even low incomes, as this money is used in a different way," Sweden Democrat party leader Jimmie Åkesson told TV4 in an interview last week.
"I think that would be better."
The Sweden Democrats, despite not being in government, have considerable power over the Moderates, and could essentially topple the government if they chose to withdraw their support. They've already shown their negotiating skills by managing to effectively get their entire migration policy in to the coalition agreement, and aren't afraid to threaten to break ranks if they don't get what they want.
Coalition party the Christian Democrats, who are in government, were also apprehensive of raising the national tax threshold, according to Svenska Dagbladet newspaper, prioritising welfare and shorter healthcare queues over tax cuts for the rich.
Once again, the cracks between the four parties currently in charge of running the country are showing.
Politics in Sweden is a weekly column looking at the big talking points and issues in Swedish politics. Members of The Local Sweden can sign up to receive an email alert when the column is published. Just click on this “newsletters" option or visit the menu bar.
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