Swedish Government Plans Tax Cuts For Pensioners

by Ulrika Lomas, Tax-News.com, Brussels

05 September 2008

The Swedish government has pledged to lower rates of tax for the country's pensioners, following a promise last month that a further, third round of tax cuts to benefit low and middle income earners will be included in its autumn budget, in addition to corporate tax cuts.

Announcing its plans on Wednesday, the government proposed the introduction of a lower rate of tax for Swedes aged 65 and over who earn less than SEK363,000 per year, which represents the vast majority of Sweden's over sixty-fives, according to official estimates.

Swedish Prime Minister, Fredrik Reinfeld observed that:

“The proposal is very well-targeted. It’s a reform that is well-motivated from a distribution policy standpoint.”

However, critics have pointed out that higher income pensioners will not see much benefit from the proposals at all.

Mr Reinfeldt revealed that the forthcoming third wave of tax reductions, amounting to SEK15bn, is expected to benefit taxpayers to the tune of around SEK250 per month.

He also suggested that corporate tax cuts were likely to play a role in the next budget, but did not provide further detail on this aspect of the government's plans.

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