Sweden's New Coalition Plans Tax Cuts Into 2020 to Stoke Jobs

(Bloomberg) -- Sweden’s new coalition will mean a shift in economic policy as centrist and liberal parties gain sway over the nation’s budget.

The former opposition parties have extracted promises, but also concrete proposals for this year and next.

“We will try to find a way to decrease the number of people who pay state income tax, and we will also look at the marginal tax rate again,” said Martin Adahl, chief economist at the Center Party. “we will also look broadly at tax cuts, so there will be big things happening in terms of lower taxes on jobs and business.”

Here’s a summary of the biggest plans:

  • Spring budget, set to be unveiled mid-April, will include new initiatives of 4.5 billion kronor ($500 million), including lowering payroll taxes on new employees and young people under 18, as well as new spending on the climate and environment.
  • Budget next year will include 15 billion kronor in tax cuts, including 6 billion kronor to lower payroll taxes and 7 billion kronor to abolishing the top 5 percent tax rate
  • Environmental taxes will also be raised 15 billion kronor to pay for additional tax cuts on jobs and business
  • Major work will begin on changing the Public Employment Service and on easing labor market regulations
  • Aims for tax reform to move away from subsidizing borrowing, with the Center party advocating phasing out mortgage tax deductions
  • Will reopen stranded talks on high-speed rail, seeking to finance network through borrowing so it “can be built quickly and efficiently;” can borrow through debt office or create a special consortium for project over the next 20 to 30 years.
  • Rules on employee stock options will also be changed, making them “at least as attractive as the British system, and compatible with the EU.”
  • Will look at financial sector tax that won’t harm entrepreneurship.

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