The system is meant to ensure that both rich and poor municipalities have similar services, such as healthcare, elderly care, and education. Money is taken from more well-off municipalities and transferred to areas with, for example, a dwindling or again population.
"We've been given a very serious challenge. We have to look at the issue right now so that we have enough time to put forward a proposal in the fall," Peter Norman, the Minister for Financial Markets, told news agency TT.
The system was last changed in 1996, and critics say it is outdated. "Every year that goes by, rural communities lose out more," says Anders Sellström, a Christian Democrat politician.
The Center Party politician Per Åsling says the current system is actually increasing disparities in child and elderly care between communities, rather than decreasing them. "All children and elderly should be treated the same no matter where they live," he says.
However several more well-off urban areas are worried that they will have to raise taxes under a revamped system. And the Stockholm Chamber of Commerce warns that the proposal could dampen growth.
Politicians agreed last April to go ahead with a proposal to update the tax equalization system, but that proposal got held up due to various Parliamentary procedures.