Centre-Right Alliance Triumphs In Swedish Poll

by Ulrika Lomas, Tax-News.com, Brussels

19 September 2006

Sweden has voted for lower taxes and a smaller welfare state as the centre-right opposition alliance won a closely contested election last weekend.

With the majority of votes having been counted, it emerged on Monday morning that the four-party alliance led by Fredrik Reinfeldt of the Moderate Party had won 48.1% of the votes, compared with 46.2% for the Social Democrats and their two supporting parties, the Greens and the Left Party. This gives the alliance 178 seats in the 349-seat in the Riksdag assembly, and a slender majority of seven seats.

The election ends the 12-year reign of Prime Minister Goran Persson and the centre-left's long period of domination of government in Sweden, which had campaigned on strengthening the 'Swedish model' of high taxation to fund state provision of public services.

In contrast, the alliance has promised to cut income, corporate and property taxes by about 60 billion kronor ($8.2 billion), which will be financed in part by cuts in unemployment and sickness benefits. It also wants to make it easier for companies to hire workers and remove certain state benefits which it argues act as a disincentive to work.

Reinfeldt has also proposed to sell about SEK200 billion of state-owned shares over four years, including holdings in Nordea bank, telecoms firm TeliaSonera and airline SAS. Shares in these companies gained value on the Swedish stock exchange the OMX after the election result was announced.

Reinfeldt's coalition is expected to take office early in October when parliament reconvenes.

Recommended