Posted on 03/28/2007 5:55:23 PM PDT by WesternCulture
Sweden will abolish its wealth tax this year to boost investments and create jobs, Prime Minister Fredrik Reinfeldt said Wednesday, the latest in a slew of reforms announced since his centre-right government ousted the Social Democrats from power six months ago.
The move was broadly welcomed in political and business circles.
"We will propose to abolish wealth tax as of 2007 in our spring budget bill," Reinfeldt, the leader of the conservative Moderate Party, wrote in an article published in daily Dagens Nyheter.
The article was co-signed by the heads of the three other government coalition partners, Maud Olofsson of the Centre Party, Lars Leijonborg of the Liberals and Göran Hägglund of the Christian Democrats.
The spring budget bill, to be presented to parliament on April 16, is traditionally a revision of the autumn budget.
The move is aimed at attracting risk capital investments, which would helpcompaniesgrow and increase employment, the government said. Job creation has been the centre-right government's primary objective since coming to power.
"We hope to give a boost to the desire to invest in Sweden, in order to create conditions for new, expansive companies and create more new jobs," the four party leaders wrote.
They quoted tax authorities as saying that Swedish capital worth about 500 billion kronor ($72 billion) is currently placed abroad for tax reasons.
Finance Minister Anders Borg said Sweden also needed to keep pace with developments in other countries.
"When one country after another abolishes wealth tax, and we are left as one of the few countries to still have it, then you have to take this kind of decision," he said.
The government said that of the 30 members of the Organisation for Economic Cooperation and Development (OECD), only five countries – France, Norway, Spain, Sweden, Switzerland – still have wealth tax.
Wealth tax was introduced in Sweden in 1947. In 2005, the state yielded some 4.8 billion kronor ($688.2 million) in revenues from the tax. Some 225,000 people pay the tax, representing about 2.5 percent of the population.
The tax is equivalent to 1.5 percent of wealth exceeding 1.5 million kronor for singles and 3.0 million kronor for couples.
However, some of the country's richest entrepreneurs have been exempt from wealth tax since 1997 – including the family that controls Swedish cheap and chic fashion retailer H&M – since they threatened to leave the country and take their companies with them if they were forced to pay millions of dollars in wealth tax.
The abolition of the tax is expected to be adopted in parliament, where the four coalition partners hold a majority.
The measure will be compensated by a decrease in the tax break granted to private pension savings.
An employee earning up to 400,000 kronor a year can deduct about 20,000 kronor for money invested in a private pension fund. The government will now cap deductions at 12,000 kronor per person per year.
Since taking power after September's elections, the centre-right government has introduced a series of measures aimed at getting Swedes into the workforce, including a reduction of unemployment insurance and higher union fees, as well as a tax break on home help.
It has also proposed the sale of the state's holdings in six companies.
Those measures caused a storm of controversy from the opposition and unions, and the government's popularity suffered as a result.
By contrast, the wealth tax move has been widely welcomed, though not all approve of the methods used to get rid of it.
The powerful Confederation of Swedish Trade Unions, LO, which has close links to the opposition Social Democrats, said it was "unacceptable" that pension savers have to pay the price of the abolition,. The Confederation of Swedish Enterprise hailed the move as a "sensible decision".
Okay, so the SD folks, like our Democrats, view much of the Middle Class as "rich" folks.
"Okay, so the SD folks, like our Democrats, view much of the Middle Class as "rich" folks."
- To begin with, I think SD people are more Socialist than average US Democrats/liberals, but they're much more Capitalist friendly today than they were 20-30 years ago. The views of Conservative 'Moderaterna', the party which PM Reinfeldt is the leader of, I'd say are somewhere between those of traditional Democrats and traditional Republicans.
Concerning the Swedish tax system:
It would, naturally, be absurd to view average income earners as rich. The Swedish system of taxation is strange even to many Swedes, but it isn't that ridiculous. However, it views even a rather modest amount of free cash as wealth.
Most people in Sweden who have $200 000 on a bank account are upper middle class/upper class people (as you don't have to pay any money for sending your children to collage and university in Sweden and you seldom get into situations where you suddently need a large amount of money, people don't save up a lot of money on bank accounts like people on the same income levels would do in the US).
Some people in Sweden who dispose of a 'wealth' of $200 000 aren't high income earners, they're not even average income earners. For instance someone with a 'wealth of $200 000 could well be a university student (which in general are low income earners in most countries) that has inherited $200 000 and wishes to keep them for some years on a bank account and use them later on for buying a house, starting a business of his/her own etc. Such a person will also be punished. If he or she instead would've invested the money in say, gold, this capital wouldn't have had to be paid any taxes for at all.
My point is that it's a bit bizarre to pay taxes for an amount of money that is NOT especially high compared to the possesions of an middle aged, average income earner. On the other hand, we do have also have property taxes, but things like valuable antique furniture, diamonds, art etc is not considered wealth although it undeniably is a capital just like an equivalent sum of money.
Hope I made myself clear.
Best of regards!
(Concerning SD people viewing Middle Class as rich,) I forgot to say that a lot of people who vote for The Social Democrats are average or above average income earners, but don't seem to fully understand it. They feel no one else makes such a valuable contribution to society that they deserve a higher income than that of their own and furthermore they don't think people who perform the same kind of work as they do deserves their kind of salary.
At least that is my interpretation.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.