Speaking to journalists on July 4th Fredrik Reinfeldt, Prime Minister of Sweden and leader of the Moderate Party, adamantly ruled out the possibility of cuts to personal tax rates in 2011, if his party is reelected. He conceded that the only possible exemption to the tax policy will be pensioners, as Fredrik Reinfeldt had previously promised an easing of tax burdens for the elderly population in the economy. According to Fredrik Reinfeldt, the best course of action for the Sweedish economy is to concentrate on job creation and economically beneficial Government social programs, with tax cuts being reserved for a healthier economic time.

Mona Sahlin, leader of the Swedish Democratic Party (SDP), has not yet revealed a concise plan for her party’s tax policy. However, she has indicated that, if elected, the SDP will be focused on ensuring Sweden’s recovery from the worldwide economic recession, primarily through extended job creation fiscal and social policy. Mona Sahlin has also stated that her party is considering instating a “wealth tax” and raising personal income taxes. Although any increased tax revenues will be offset by heavily increased social programs and welfare arrangements.

Maria Wetterstrand, leader of the Green Party, is expected to reveal a full tax plan soon in response to Fredrik Reinfeldt’s statement. She has previously criticized the current Government’s tax cuts as not being adequately geared towards environmental protection. She claimed that the Government has been too concentrated on tax rates, with little regard to health of the Swedish population and environmental proection.

Political analysts have acknowledged Fredrik Reinfeldt and Mona Sahlinas the primary candidates for the election in September. Currently Fredrik Reinfeldt is polled as a stronger leader, with his party receiving marginally better approval in opinion surveys. Although, some experts have revealed surprise at the withdrawal of future tax cuts and policy choice resembling that of the SDP, with questions being raised to the uncertain affect the policy choice will have with voters and taxpayers.

Photo by Baltic Development Forum

On April 6th the OECD and Council of Europe released a media statement announcing that the CMAAT will be updated in order to bring it up to currently agreed upon standards of international tax transparency. The Convention, opened for signing in 1988, is an international framework which provides facilitation of multinational exchange of fiscal information. The Convention will be updated to reflect modern internationally agreed upon standards in tax transparency and exchange of fiscal information. Under the update, domestic tax law limitations will be removed and exchange of bank information will be available.

The CMAAT update will open participation in the agreement to non-Council of Europe and non-OECD nations, and invitations will be extended for new signatories, especially among developing economies. Angel Gurría, OECD Secretary-General, explained the need for the change, saying that it “…provides for the opening of the convention to countries that are not members of the Council of Europe or the OECD, thereby transforming it into an instrument to fight tax evasion worldwide.”

The CMAAT, originally drawn up under the aegis of the OECD and the Council of Europe, is currently enforced by Azerbaijan, Belgium, Denmark, Finland, France, Iceland, Italy, Netherlands, Norway, Poland, Sweden, United Kingdom, United States, and Ukraine. Canada, Germany and Spain have signed the agreement, though have yet to ratify it.

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The widely debated topic of Carbon Taxation has once again been brought up with the revelation that the European Commission (EC) will soon lead an inquiry about a possible EU-wide implementation of such a measure. In a statement made by Emer Traynor, spokeswoman for Algirdas Semeta, revision of the current Energy Taxation Directive was a priority issue for the Commissioner. Further, in a previous statement made in Brussels, Algridas Semeta said that carbon taxes “…on a larger, European scale seems desirable, as they would undoubtedly encourage innovation to strengthen energy efficiency and environmental protection.”

A proposal for a new carbon taxation system is expected to be released in May. Previously released EC drafts indicated that the tax would be based on the exact amount of Carbon Dioxide released by various fuels, and not their net energy, ideally leading to refinements in their use or implementation.

The concept of EU-wide taxes is still a controversial idea and is not wholly accepted by EU-member nations or the EC. Although, Carbon Taxes have grown to be a widely discussed and considered option in recent years, with numerous member states pushing for implementation of such measures. Earlier in 2010, French President Nicolas Sarkozy vowed that a Carbon Tax would be instated in France before the end of the year. In 2009 attempts were made in France to create similar measures. Though they were deemed to be unlawful by French Constitutional Council, and were subsequently dropped. Due to internal differences of opinion, the EC has not previously made a strong statement as to its intention of implementing an EU spanning tax, the problem is compounded by the fact that unanimous agreement would be needed across all member-states before any measures are implemented.

The UK Government has already spoken out against the proposed measure, releasing a statement that saying, “We believe that member states are best placed to choose the policy tools for achieving their climate change objectives.” Carbon Taxes have already been implemented on a national level by the EU-member nations Sweden, Denmark and Finland.

Photo by garden beth

According to the OECD’s “Revenue Statistics: 2009 Edition” report, published November 24th, the tax burden by its members has fallen as the worldwide financial crisis tolls global economies. The aggregate tax receipt-to-GDP ratio across the surveyed OECD nations in both 2007 and 2006 was 35.8%. Based on current provisional figures, this ratio has now fallen to an approximate 35.2% or 35.3%.

Mexico displayed the lowest tax burden with 21.1%, followed by Turkey and Korea at 23.5% and 26.6%, respectively. Denmark was ranked as the highest tax receipt to GDP ratio nation at 48.3%, Sweden and Belgium ranked second and third with 47.1% and 44.3%. The United Kingdom reported a figure of 35.7%, and the US is facing 26.9%. Based on the 2008 provisional figures, Iceland experienced the biggest year to year drop of 4.8%, and Mexico saw the highest rise with 3.1%. Australia, Japan, Netherlands and Poland did not provide provisional 2008 figures in time for the publication.

According to an OECD publication accompanying the “Revenue Statistics: 2009 Edition” report, the tax receipts of a nation typically fall proportionately more than GDP in times of recession. The current climate of government tax cuts aimed at boosting economic growth, only serves to accentuate this tax receipt-to-GDP fall.

Commenting on the findings Angel Gurría, OECD Secretary-General, said “Governments acted decisively in 2008 and 2009 to support demand during the crisis … but falling tax receipts underline the challenge they will face, once the recovery is secured, in maintaining sound public finances”.

The OECD has made available the “Revenue Statistics: 2009 Edition” report and the accompanying tax burden publication.

In an effort to bolster the ailing employment market, the Swedish Government has announced another round of income tax cuts. The tax cut will see a cut of SEK250 from the average worker’s monthly tax duty. It is intended that the lowered income tax levels will encourage Swedish citizens to return to the work force. Prior to the tax cuts, governmental estimates had placed unemployment in Sweden at 8.8% in 2009, reaching 11.4% in 2010.

The cut was announced by Fredrik Reinfeldt, Swedish Prime Minister, on 19th of September. It is scheduled to be presented to parliament on the 28th of September. If accepted, the income tax cuts will come into effect on the 1st January 2010. The decision is budgeted to cost the government approximately SEK10 billion.

In regards to tax cuts, in a released statement the Swedish government said, “The coalition government has agreed on reforms for jobs and entrepreneurialism that will increase employment in the long-term. It has to be more profitable to work and more companies should be able to hire employees”. Anders Borg, Sweden’s Minister for Finance, made statements at the announcement saying that the tax cutting measures are aimed at reversing the damage done to Sweden’s economy by the world financial crisis.