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What you need to know about the Swedish government’s proposals to cut tax for 7.5 million people

Sweden's Finance Minister has announced three tax cuts ahead of the autumn budget, which she expects will have an impact on the wallets of three quarters of the total Swedish population.

What you need to know about the Swedish government's proposals to cut tax for 7.5 million people
The changes proposed would affect low- and middle-income earners, members of unemployment insurance funds, and people on sickness benefits. Photo: Johan Jeppsson/TT

“This means more money in the wallet for ordinary people,” Finance Minister Magdalena Andersson, one of the favourites to take over as leader of the governing Social Democrats, promised when she announced the cuts.

One of the cuts would be a further extension of a tax cut aimed at low- and middle-income earners. This will be up to a maximum of 2,820 kronor per year in 2022 for those earning over 265,000, with smaller reductions for those on lower salaries.

Another proposal is to increase the tax reduction for sickness and disability benefits, reducing the gap between taxes on those benefits and earned incomes. Currently, people who receive these benefits pay around 10,000 kronor more in tax on average when compared to a working person on the same income level, and Andersson said the change would lead to “increased fairness in society” by supporting a “financially vulnerable group”. 

The third proposal is a tax reduction for payments to unemployment insurance funds (a-kassor), equal to 25 percent of the annual fee or a tax reduction of roughly 400 kronor per year for most members of these funds. The goal of this change is to encourage more workers in Sweden to join the funds, which pay members who become unemployed. 

So how much more would you get in your wallet if the proposals go through?

Andersson presented examples showing that a retired person on a pension of 240,000 kronor for example, would benefit to the tune of 1,668 kronor each year, and that a family made up of an assistant nurse and shop assistant (with annual salaries of 371,920 and 362,880 kronor respectively) would have 3,432 kronor extra after the changes.

“I think it’s not enough to be considered as a promise aimed at winning votes [in the September 2022 election], it doesn’t have enough impact on the wallet. But we’ll see what the rest of the budget will consist of. After all, this is a small part of the total budget,” Emma Persson, a private economist at Länsförsäkringar, told the TT newswire.

“The winners in this are those who are part of an unemployment insurance fund, live on sickness benefits and low- and middle-income earners who get to see a small boost to their wallet. Even if it is not a huge tax cut, for a person who earns 25,000 kronor, it is about 110 kronor a month,” she added.

In order for the cuts to actually come into effect, the government will need to get its budget passed by parliament in a vote. 

That’s not necessarily guaranteed, given that the margins between the different blocs are extremely thin and a previous alliance with the Centre and Liberal parties collapsed earlier this year. 

Passing its budget would require the government to get support from both the Centre and Left parties, who were both positive about Wednesday’s announcement.

However, the Centre’s economic political spokesperson told the TT newswire the reduction was “completely insufficient” to convince the party to vote in favour.

The Left Party said it would need to hear more about plans for financing the proposals, with their spokesperson welcoming the change to sickness benefits, but noting: “If you lower taxes, there will be less money for grandma’s elderly care and for healthcare that needs more resources. In the long run, it is unsustainable, so we expect this to be financed by raising taxes for those who have large capital incomes, large fortunes or large incomes in general.”

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NATO

IN PICTURES: ‘New era’ as Nato flag hoisted outside Swedish parliament

'Sweden wants peace,' said King Carl XVI Gustaf as he spoke at a flag-hoisting ceremony outside the Swedish parliament to mark his country's Nato membership.

IN PICTURES: 'New era' as Nato flag hoisted outside Swedish parliament

“A new piece of Swedish history is being written,” said the King in his speech on Monday.

“We have left behind the military freedom of alliance founded under Karl XIV Johan,” he added. “A new era of security policy has begun.”

Sweden applied to join Nato following Russia’s full-scale invasion of Ukraine in 2022.

Prime Minister Ulf Kristersson, King Carl XVI Gustaf, parliamentary speaker Andreas Norlén, Social Democrat leader Magdalena Andersson, Supreme Commander of the Armed Forces Micael Bydén, among others. Photo: Jonas Ekströmer/TT

The King said that Sweden’s membership would contribute to regional stability, but wasn’t targeted at anyone.

“Sweden wants peace. Thus wrote my grandfather, Gustav VI Adolf, and Prime Minister Tage Erlander to Swedish citizens in the 1960s. That’s still the case today. Sweden threatens no one. Sweden wants peace,” he said.

The Nato flag flying next to the Swedish flag and the EU flag outside parliament. Photo: Pontus Lundahl/TT

Prime Minister Ulf Kristersson, speaker of parliament Andreas Norlén and military supreme commander Micael Bydén also attended the ceremony on Monday, alongside members of parliament, government ministers and several party leaders.

US ambassador Erik D Ramanathan and Charlotte Petri Gornitzka, director-general of the Swedish Civil Contingencies Agency. Photo: Pontus Lundahl/TT

Across the water, outside the Royal Palace, a group of around 20 people held up banners and loudly chanted “no to Nato”.

Demonstrators holding signs reading Free Palestine; Sweden doesn’t need Nato for peace – Nato needs Sweden for war; No to Nato; No to war crimes club Nato. Photo: Samuel Steén/TT

The war in Ukraine and Sweden’s Nato application has not only boosted support for Nato, but also for peace movements.

The Swedish Peace and Arbitration Society (Svenska freds) has more than doubled its membership in two years, from just over 6,000 in February 2022 to 15,000 at the start of March 2024, reported regional public radio broadcaster P4 Jönköping earlier on Monday.

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The Swedish branch of the Women’s International League for Peace and Freedom (Internationella kvinnoförbundet för fred och frihet) has grown by 35 percent since January 2022, and the Christian Peace Movement (Kristna fredsrörelsen) grew by 12 percent in 2023.

According to Kerstin Bergeå, chair of Svenska freds, which is against Nato membership, a total of 200 new members signed up on the same day that Hungary ratified Sweden’s application.

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