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Few changes in price after restaurant tax cut

Despite a significant decrease in value added tax, VAT, (moms) for restaurants in Sweden coming into effect at the beginning of the new year, few businesses have lowered their prices accordingly.

Few changes in price after restaurant tax cut

The government invested billions of kronor in a controversial move to reduce taxes for the restaurant business, and many Swedes saw this as their chance to afford a few more visits to eateries countrywide.

But according to a survey by the Sveriges Television regional news programme Östnytt, that might just have been wishful thinking.

The survey found that only six out of 26 restaurants in the area had lowered their prices, and that a mere seven were planning to hire more staff.

And when newspaper Metro did a similar survey, they found that only three out of the 30 restaurants they visited had lowered the prices on their menus after the new tax rules were put into effect.

Björn Lundell at the Swedish Hotel and Restaurant Association said the numbers are disappointing.

“It’s not nearly enough,” he told SVT.

“We encourage all our members to make the most of this tax reduction.”

So far this seems to be limited to larger corporations such as fast food restaurants McDonalds and its Swedish counterpart Max, which have both lowered the prices on their menus and are also looking to hire.

But there is still hope for Swedes who wish to save a few kronor on eating out, Lundell said.

“We are asking everyone to have some patience. It’s only been a few days since the new tax was introduced,” he told Östnytt.

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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.  

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