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Would lowering V.A.T. on repairs do any good?

Published fredag 15 april 2016 kl 11.35
"I can't see the point of it"
(5:00 min)
Jens Hindersson runs a bicycle repair shop in Stockholm. Photo: Brett Ascarelli / Radio Sweden
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Jens Hindersson runs a bicycle repair shop in Stockholm. Photo: Brett Ascarelli / Radio Sweden
Hindersson (left) believes that if the proposal is passed, it will be hassle for him to make transactions, considering there would be two different V.A.T. levels on what his shop offers. Photo: Radio Sweden.
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Hindersson (left) believes that if the proposal is passed, it will be hassle for him to make transactions, considering there would be two different V.A.T. levels on what his shop offers. Photo: Radio Sweden.
Sofia Hansson thinks the proposed legislation would encourage her to repair more of the items she owns. Photo: Brett Ascarelli / Radio Sweden
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Sofia Hansson thinks the proposed legislation would encourage her to repair more of the items she owns. Photo: Brett Ascarelli / Radio Sweden
Charlotta Kåks Roshammar says lowering the V.A.T. on repairs wouldn't encourage her to get more things fixed. She already takes her bike into the shop when needed, and as for other items she owns that would be covered by the law, she mends them herself. Photo: Radio Sweden
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Charlotta Kåks Roshammar says lowering the V.A.T. on repairs wouldn't encourage her to get more things fixed. She already takes her bike into the shop when needed, and as for other items she owns that would be covered by the law, she mends them herself. Photo: Radio Sweden

One of the measures in the Spring Budget proposal that the government presented this week could make it cheaper to get certain items repaired, but consumers and business owners Radio Sweden spoke to were divided about whether the proposed change would have a significant impact.

By attempting to make repairs cheaper, the government hopes to give items like bicycles, leather goods, shoes, clothes and textiles a longer lifespan, so that people won't just toss them away when they get worn out to buy something new instead. This has been a pet issue for the Greens, who are part of the ruling coalition with the Social Democrats. The government also argues that if there's a higher demand for repair work, that could create more jobs.

The plan would cut the value added tax on repairs to the aforementioned items from 25 percent down to 12 percent, which means customers would pay 13 percent less in V.A.T. than what they're paying now. 

Consumers Radio Sweden spoke to had different opinions about whether the change would encourage them to take advantage of repair services more. 

"I think a cheaper price will make me more keen to repair for example clothing. That is often more throw-away, otherwise," Sofia Hansson told Radio Sweden.

On the other hand, Charlotta Kåks Roshammar told Radio Sweden she already does most of the mending she needs for herself.

As for how the measure could affect businesses, Jens Hindersson, who runs a bicycle repair shop in Stockholm, said he didn't feel it would make much of a difference in the long term in terms of bringing in more customers. Moreover, he worried about being saddled with the extra burden, both in terms of time and money, of having to conduct transactions with two V.A.T. levels, since his shop sells both parts and labor. 

The government's proposal admits that the measure could create an extra administrative burden for businesses that would have to deal with two different tax rates.

Others Radio Sweden spoke to had mixed feelings about the proposal as well. One tailor said that profit margins in his business are so small anyway, that the measure would not make a difference, whereas a shoemaker had the opposite view, and said the measure could give his business a big boost, and also make repairs cheaper for customers. 

If the government's proposal to reduce the VAT on repairs gets passed into law, it will go into effect in January of 2017.

Our journalism is based on credibility and impartiality. Swedish Radio is independent and not affiliated to any political, religious, financial, public or private interests.
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