Higher or Lower Taxes, on What?

Taxes in Sweden correspond to 50 percent of GNP, the highest in the European Union. Generally the Social Democrats and their allies want to maintain high taxes to finance the welfare state. The Alliance wants to reduce taxes so that individuals keep more in their pockets, but pay more for welfare services. Which taxes will be election issues?

Income Taxes

The state and local authorities bring in around 65 billion dollars a year in taxes on labor. In recent years these taxes have been reduced. The Social Democrats, Left, and Greens generally wish to maintain the current level. The Alliance wants to reduce income taxes by around 11 billion dollars during the first two years. The reduction would be financed by lower social benefits, obligatory membership in unemployment compensation schemes, etc.

Property Taxes

The state (not local authorities) receives around 3 billion dollars a year in property taxes. A household never has to pay more than 4 percent of its income in property taxes.

The Social Democrats, Left, and Green parties want to reduce the tax for summer cottages as well as houses worth more than around 420,000 dollars.

The Social Democrats have frozen the tax at the 2005 level for 2 years, and promise a major review. But the tax will remain.

The Alliance wants to abolish the property tax in the long-term, but has had problems with the issue during the campaign. First they promised to freeze property taxes at the current level, as the Social Democrats have done, then they said that would be too expensive. The Conservative Moderates proposed financing this through lowering a tax deduction on loans, but withdrew the proposal after a few days.

Most recently the Alliance wants to freeze the property tax at the 2006 level, reduce it for rentals and condominiums from 0.5 to 0.4 percent, as well as impose a 5000 kr ceiling on the property tax for land. They say they will abolish the tax by 2008 at the earliest ”if the financing is solved”. replacing it with a low municipal fee.

Green Taxes

Under the influence of the Greens the government has increased taxes on activities which cause pollution, in return for decreases in other areas, such as taxes on labor. Between 2001 and 2010 this is to involve around 4 billion dollars. The Alliance parties believe this is misguided and will only mean more expensive electricity for industry and households. They want to reverse the process.

Wealth Taxes

In 2005 the state gained 763 million dollars from wealth taxes. These is paid by individuals with assets of more than around 200,000 dollars, and couples with a fortune of more than around 400,000 dollars. After recent changes fewer people pay this tax, in 2000 there were 700,000, last year this had dropped to around 200,000.

The Social Democrats, Left, and Greens want to keep the wealth tax, the Alliance wishes to abolish it completely.

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