Sweden votes for largest income tax cuts in 10 years Sweden votes for largest income tax cuts in 10 years

Sweden votes for largest income tax cuts in 10 years
20 Dec 2018

Sweden voted to introduce the largest proposed income tax cuts in more than 10 years after Parliament back a budget proposal from opposition parties rather than the caretaker government.

The country’s political system has been locked in a stalemate for three months following an election that delivered a hung parliament, leaving it without a government since September.

But last week, the political turmoil deepened when Parliament voted against the 2019 transition budget set out by Social Democrat leader, Stefan Lofven. The Budget had been put together in consultation with the opposition Alliance and the Left Party in order to make it as politically-neutral as possible as caretaker governments are not meant to make partisan decisions.

Opposition parties are still allowed to put forward their own budget proposals though and that of the Alliance, Moderates and Christian Democrat parties won the most votes, after far-right party the Sweden Democrats, which is the third largest in Parliament, gave its backing. The other two members of the Alliance, the Centre Party and Liberals each presented their own budget too, but opted not to vote for any of the proposals.

The defeat came as a blow for Lofven, who is now expected to lose a vote on Friday to be accepted as Sweden’s Prime Minister.

The winning budget put forward consists of roughly 20 billion kronor (US$2.2 billion) in tax cuts, including the biggest reduction in income tax since 2007. The 10 billion kronor-worth (US$1.1 billion) of income tax cuts consist of four billion kronor (US$0.44 billion) from raising the threshold for state income tax and pension tax reductions of 5.2 billion kronor (US$0.57 billion).

The centre and liberal parties had previously indicated they were ready to support Lofven as a means of breaking the political deadlock and keeping the anti-immigration Sweden Democrats politically isolated. But centre leader Annie Loof indicated that Lofven had not accepted her demands for lower income taxes and more liberal labour laws.

She told The Express: ”We would have needed to see considerably more liberal political reforms in order for the Centre party to be able to come to an agreement and allow Stefan Lofven four more years.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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Sweden voted to introduce the largest proposed income tax cuts in more than 10 years after Parliament back a budget proposal from opposition parties rather than the caretaker government.

The country’s political system has been locked in a stalemate for three months following an election that delivered a hung parliament, leaving it without a government since September.

But last week, the political turmoil deepened when Parliament voted against the 2019 transition budget set out by Social Democrat leader, Stefan Lofven. The Budget had been put together in consultation with the opposition Alliance and the Left Party in order to make it as politically-neutral as possible as caretaker governments are not meant to make partisan decisions.

Opposition parties are still allowed to put forward their own budget proposals though and that of the Alliance, Moderates and Christian Democrat parties won the most votes, after far-right party the Sweden Democrats, which is the third largest in Parliament, gave its backing. The other two members of the Alliance, the Centre Party and Liberals each presented their own budget too, but opted not to vote for any of the proposals.

The defeat came as a blow for Lofven, who is now expected to lose a vote on Friday to be accepted as Sweden’s Prime Minister.

The winning budget put forward consists of roughly 20 billion kronor (US$2.2 billion) in tax cuts, including the biggest reduction in income tax since 2007. The 10 billion kronor-worth (US$1.1 billion) of income tax cuts consist of four billion kronor (US$0.44 billion) from raising the threshold for state income tax and pension tax reductions of 5.2 billion kronor (US$0.57 billion).

The centre and liberal parties had previously indicated they were ready to support Lofven as a means of breaking the political deadlock and keeping the anti-immigration Sweden Democrats politically isolated. But centre leader Annie Loof indicated that Lofven had not accepted her demands for lower income taxes and more liberal labour laws.

She told The Express: ”We would have needed to see considerably more liberal political reforms in order for the Centre party to be able to come to an agreement and allow Stefan Lofven four more years.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER STORIES THAT MAY INTEREST YOU

Sweden: Monthly PAYE to replace annual income statements

Swedish government deadlock impacts 2019 regulatory agenda

Sweden tightens up long-term sickness rules 

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