Finance Minister Magdalena Andersson formally presented the budget proposal that promises an annual injection of SEK 10 billion to Sweden's local governments to help them cover the rising costs of education, health and welfare services.
The government has also promised to give police and the Swedish Migration Agency a combined SEK 53 million to handle the huge influx of asylum seekers. Overall, SEK 31 billion have been added in migration spending this year.
The ruling coalition of Social Democrats and Greens say higher taxes and forecasted economic growth will help pay for the spending.
Overall, the policy bill gave a bright outlook on Sweden's economic situation over the next few years, saying unemployment was dropping, tax revenue was up and that GDP growth was expected to remain stable.
"In the spring budget, the government continues to address the refugee situation and sets out the future direction – building our society takes precedence over new tax cuts," Andersson said in a statement. "With the Swedish model as a foundation and modernization as a tool, we will respond to the challenges our country is facing. Unemployment must be fought, pupils' learning outcomes strengthened and carbon emissions reduced."
Sweden will continue to run a deficit but Andersson said that projections have it shrinking until it is paid off by 2019.
The bill also contains several new tax deductions with an environmental bent. The value-added tax on minor repair work on bicycles, shoes, leather goods, clothing and household textiles will be lowered from 25 percent to 12 percent. The package offers a tax credit on labor costs for repairing and maintaining home appliances, too.
The government also wants to expand the so-called RUT tax break, which offers tax deductions on labor costs for housework, to include moving services, IT work at home and gardening.
The government has until Friday to hand over its proposal, known as its spring fiscal policy bill, to Parliament.
The spring budget is not as important as its fall counterpart, though it does give a good indication of the path the government wants to take. The Swedish parliament will vote on the spring budget proposal in June.