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Report: Tax hikes needed to tackle local government costs

Published torsdag 28 april 2016 kl 12.30
Economist: we'll have an emergency situation in 2018
(1:06 min)
SKL's chief economist Bettina Kashefi says tax hikes may be in order for local governments. Photo: TT.
SKL's chief economist Bettina Kashefi says tax hikes may be in order for local governments. Photo: TT.

Costs will soon outstrip tax revenue in Sweden's local governments as immigrants continue to settle in the country and the population ages, according to a new report.

The report from the Swedish Association of Local Authorities and Regions (SALAR, or SKL in Swedish) says that, even with the extra SEK 10 billion promised by the national government to help with welfare and education costs, the future still looks gloomy for the nation's counties and municipalities.

Most local governments will have to raise taxes to keep the books balanced in the coming years, according to SALAR, which released its report on Thursday.

"We see very clearly in our calculations that we'll have an emergency situation in 2018, if nothing happens and it will even continue in 2019," SALAR'S chief economist Bettina Kashefi tells Swedish Radio.

Kashefi says local authorities need to become more efficient and get residents in jobs as quickly as possible. Failing that, she say, tax increases of SEK 45 billion will be needed in order to cover the increased costs of immigration and elderly care.

"Somehow, we have to cover the existing funding gap," says Kashefi.

According to SALAR's assessment, Sweden's tax base will grow during this year and next but growth will slow down thereafter. Meanwhile, municipalities are expected to see increases in costs of around 9 percent, partly due to caring for refugees as they settle into Swedish society.

The Swedish Association of Local Authorities and Regions is both an employers' organization and an organization that represents and advocates for local government in Sweden. All of Sweden's municipalities, county councils and regions are members of SALAR. 

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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