SHARE
COPY LINK

TAXES

Swedish pensioners promised tax cut

Sweden's Alliance government has promised pensioners reduced taxes in 2013 or 2014 - if the public finances allow, with reforms to help the poorest pensioners to come into force already next year.

Swedish pensioners promised tax cut

“To next year prioritise reforms for the worst-off pensioners is justified in terms of the uncertain economic situation,” Prime Minister Fredrik Reinfeldt and the three other party leaders in the center-right government coalition, write on in a debate article in Dagens Nyheter.

For those with earnings-related pensions, the increase will amount to around 3.5 percent next year and those on guarantee pensions can expect to have their pension hike 2.8 percent.

“Along with the expected low inflation and hence lower price increases this will mean a noticeable increase in real incomes for Sweden’s pensioners,” writes Reinfeldt (Moderate), education minister Jan Björklund (Liberal), enterprise minister Maud Olofsson (Centre) and social affairs minister Göran Hägglund (Christian Democrats).

The tax credit that the alliance promises the retired in 2013 or 2014 is not dependent on a future tax deduction. However, makes the four party leaders clearly state that “intrinsic value” in the tax gap between pensioners and wage earners.

“It should pay to work, but it is also should also pay to have worked,” the four write promising to “work towards a gradual reduction of the tax difference in the future.”

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

SHOW COMMENTS