Opposition Challenges 'Swedish Model' Of High Tax And Spend

by Ulrika Lomas, Tax-News.com, Brussels

28 August 2006

Opinion polls show that the centre-right Swedish opposition coalition, which wants to cut tax, has a slight lead going into next month's elections.

The four members of the opposition alliance, which consists of the Moderate Party, the Liberal Party, the Christian Democrats, and the Centre Party have produced a thirty-page manifesto setting out their policies of cutting back on Sweden's welfare state and encouraging entrepreneurship, setting up an ideological battle with the present centre-left government over the "Swedish model" of high taxation and state provision of public services.

One tax that would be in the sights of the alliance early on in their administration is the country's unpopular property tax, which is based on the value of houses and has become more burdensome as real estate prices have risen in past years.

Under the alliance's plans, the property tax would be frozen in 2007 and abolished in 2008. The bloc would also seek to abolish wealth tax, lower income taxes and trim the size of the welfare budget by SEK25 billion (US$3.45 billion).

The alliance has also pledged to reduce the government's stake in the private sector. This could involve the sale of its 19.5% holding of Nordea, the Nordic region's largest bank, its 45.3% stake in TeliaSonera, the telecommunications company, the 6.7% stake in OMX, the stock market operator, and the 21.4% holding in SAS, the airline.

"We believe the state has another role: to provide regulations and legislation and not be an actor in the marketplace itself," Moderate Party leader Fredrik Reinfeldt, on the campaign trail recently.

Reinfeldt is likely to succeed Goran Persson as the the next Prime Minister if the opposition alliance triumphs at the election, due to be held on September 17.

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