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Sweden Drops Tax Hike Plans

by Ulrika Lomas,, Brussels

06 September 2017

The Swedish Government has dropped proposals to tighten tax rules for small businesses in order to ensure passage of the 2018 Budget and prevent a vote of no-confidence.

The Government had proposed to increase the amount of tax paid by small business owners using the 3:12 tax regime, under which certain proportions of income are taxed as dividends and as personal earnings.

These proposals, originally intended to have effect from January 1, 2018, were designed to prevent mainly wealthy families from using the rules to avoid tax, and would have raised an estimated SEK4bn (USD502m) in revenue.

The Government has also proposed to increase the number of individuals paying income tax.

However, both measures were scrapped by the Social Democrat-led administration, which lacks a majority in parliament, after opposition parties threatened to veto the 2018 budget and initiate votes of no-confidence in a number of ministers.

Nevertheless, a proposal to introduce an environmental tax on air travel has survived the political negotiations, albeit in revised form to limit the impact of the tax on regional airports.

Under the air travel tax, a charge of SEK80 (USD10) will be added to the price of domestic flights and flights with destinations in the EU, and a charge of SEK430 will apply to long-haul travel.

TAGS: individuals | environment | tax | small business | business | budget | environmental tax | Sweden | dividends

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