Sweden Cuts Income Tax To Boost Jobs

by Ulrika Lomas, Tax-News.com, Brussels

25 September 2009

In a recent budget statement, the Swedish government has announced income tax cuts of around SEK15bn, in a bid to boost employment.

The proposals represent the fourth stage of the government’s tax cut program, which was initiated in 2007, and aims to encourage individuals back to work.

Eager to create an innovative and dynamic business sector, key to economic growth, the Swedish government has proposed a raft of initiatives specifically designed to attract entrepreneurs. The proposed new measures aim to strengthen incentives to start up, run and develop a business, and include granting reduced statutory social security contributions to self-employed individuals to improve growth and development opportunities for small companies.

The Swedish government also plans to increase the in-work tax credit and to reduce pensioners' taxes.

Commenting on the government’s proposals, Sweden’s Minister for Finance Anders Borg stated that "In the wake of the financial crisis, many people risk protracted and destructive economic and social exclusion after having lost their jobs. We are trying to limit damage from the crisis by taking forceful action to promote jobs and enterprise and by providing support to everyone who has been severely hit by unemployment so as to enable them to recover more quickly."

According to a government statement: “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.”

The proposals have been presented to parliament as part of the 2010 budget bill and, if approved, are due to enter into force on January 1, 2010.

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