Sweden Needs to Increase Tax Revenues

March 27, 2014 Taxation in Sweeden

STOCKHOLM – The government of Sweden has new evidence that raising tax collections will not harm the national economy, and would help support national infrastructure.

Sweden, which currently has the fifth highest tax-to-GDP ratio in the world, needs to increase the overall tax burden over the next two years to maintain the current level of funding for social welfare, education, and healthcare, according to a new report released on March 26th by the National Institute of Economic Research.

In order to raise the tax revenues necessary to fund the government’s current expenditures without reducing the quality of social services provided, the overall national tax collections over the next two years would need to be increased by approximately SEK 100 billion, a move which would bring the national tax burden up to a cumulative rate of 46 percent.

Commenting on the feasibility of such a drastic increase, the head of the department of forecasting of the National Institute of Economic Research Jesper Hansson said that under the current economic conditions and taking into consideration the employment levels in Sweden, the goals could realistic be achieved without any significant negative impact to the national economy, and the country could rather easily handle the extra burden.

The authors of the report specifically mentioned that over the last six years the government of Sweden has proactively cut the rate of several taxes faced businesses and individuals, lowering the overall tax burden to a overall rate of 44 percentloweirn it by almost 4 percent compared to the obligations faced by taxpayers in 2008.

Photo by: Margo Akermark