Sweden’s minister for Finance Magdalena Andersson has outlined proposals for a Budget that tilts towards spending the surpluses expected to be made during the next Parliament, rather than reduce taxes.
Sweden is scheduled to go to the polls in a general election on 9 September this year, and the Spring Budget is the last chance that Andersson and the current ruling coalition have to put forward policy objectives ahead of the vote.
The country’s fiscal position is markedly solid, according to the figures presented: economic growth is forecast at 3% for 2018; employment is at a 25-year high, unemployment is expected to continue falling to a rate of about 6% over the coming year; the national debt as a share of GDP has fallen by 10% over the 2014-18 period, to its lowest level since 1977.
The public sector has been in surplus since 2015 and is expected to be continue being in surplus by about 1% in both 2018 and 2019, and thereafter increase up to 2021.
Andersson noted that there will be an increasing need to provide social security, particularly in light of demographic trends showing that Swedes continue to live longer and that more children are being born. This is why the government has prioritised spending “rather than large tax cuts for the richest”, Andersson said.
A key tax issue that has emerged during the current Parliament has been taxation of venture capital investments (see below).
More recently, the Swedish Private Equity & Venture Capital Association (SVCA) has noted the possible effects of a so-called ‘Exit Tax’ that has been proposed for “unrealised capital gains of physical persons emigrating from Sweden”, which the analysts at Copenhagen Economics have suggested would “increase the effective tax level for foreigners planning to live in Sweden for an extended period.”
“For foreigners planning to stay in Sweden for a limited period, the exit tax might shorten their stay, as the rule may create significant kinks in the tax schedule of such individuals, ie, serve as an incentive to emigrate just before the exit tax becomes effective.”