Banks pay too little tax, according to the Left Party's economic policy spokeswoman Ulla Andersson. File photo: Jonas Ekströmer / TT

Left parties want new bank tax to boost Sweden's welfare sector

The government and the Left Party want to introduce higher taxes for banks and financial companies in order to raise SEK 1.4 billion for welfare services.

Another reason for the tax hike is that banks pay too little in relation to their profits, the Left Party's economic policy spokeswoman Ulla Andersson told Swedish Radio News.

According to the proposal, banks, insurance companies and other corporations within the financial sector will pay higher taxes as of next year. Starting January 1, 2017, these institutions will for instance be blocked from making tax deductions on so-called subordinated loans.

The proposal will be part of the autumn budget and since both government parties - the Social Democrats and the Greens - and the Left Party support it, chances are high it will be approved.

The proposal follows an earlier one, which the Social Democrats presented ahead of the 2014 election. It involved introducing a bank tax that is intended to generate SEK 4 billion for the state. That measure is meant to come into force in 2018 and is separate from the one presented today, according to Andersson.

"This is a completely new proposal which has not been presented in any form before," Andersson said.

Should both proposals go through, they will generate nearly SEK 5.5 billion, out of which 1.4 billion would come out of the new tax proposal, presented Wednesday. The three leftist parties underlined that these potential tax revenues should be compared to the financial sector's SEK 120 billion profit in 2014.

Asked if SEK 1.4 billion is sufficient, Andersson said: "This is a stepping stone and it will also fund our common welfare, which needs to be extended and improved."

Regarding the risk that the banks' higher costs will negatively impact their clients, Andersson said: "It is not certain yet how the banks will handle this, but it is imperative for the bank sector to pay more taxes than it does today."

Commenting on how the proposal is likely to be received among the general public, Swedish Radio's domestic policy commentator Tomas Ramberg said that, when it comes to public opinion, proposals to tax banks are "fail safe". He said: "Take to the streets and try organising a demonstration to lower banks' costs and taxes and you're unlikely to get many people to join you."

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