The tax researcher: Lower taxes on earned income and business
Lower the taxes on earned income and business and raise the food VAT and housing taxes. These are parts of a tax reorganization that benefits Sweden according to tax researcher Åsa Hansson.Updated: July 30, 2022, 8:44 p.mPublished: July 30, 2022, 8:30 p.mIn a research report from SNS, “A tax system for Sweden in a global world”, a variety of tax proposals are presented that would benefit the Swedish economy according to research leader Åsa Hansson, associate professor of economics at the School of Economics at Lund University. “The two areas that stand out in Sweden are that we has high taxation of labor and low tax on real estate,” she says in a summary comment in an interview with Di. Corporate taxation should also be reformed according to the tax researcher. “It yields fairly small tax revenues, but attractive corporate taxation is important for entrepreneurship and investments and thus for jobs and welfare. If the economy grows, it benefits everyone in Sweden.” She points out that Swedish corporate tax was previously competitive, but that many competing countries have now lowered their corporate taxes. “We don’t need to have the lowest taxes in the EU, but Sweden’s competitiveness is weakened if we have high taxes on business. We need to compensate for the disadvantages of being a small market and a bit remote,” says Åsa Hansson.Åsa Hansson, docent in economics at Lund University.The tax researcher is missing one broad political discussion about the tax system in the election campaign and is aware that many of the report’s proposals are controversial if the context of a tax reform is missing.”Unfortunately, knowledge of the tax system is low so it will not be a major election issue. People tend to only look at taxes that affect their own wallets and find it difficult to absorb the whole tax system or discussions about entrepreneur taxes.”The popular savings form ISK, with an annual tax on funds and shares, as well as the abolition of the hated property tax are two examples on taxation that should be changed according to Åsa Hansson. “It is absurd that we tax passive investments, such as savings in ISK and real estate, lower than active investments where people take greater risk by, for example, starting companies.” As regards tax on housing, it is proposed in the report three different models that would increase tax revenues by between SEK 24 billion and SEK 44 billion. The basis of the change would be to remove the ceiling in today’s property tax, which is now SEK 8,874. In addition, according to the proposal, a tax on condominiums in multi-family buildings will be introduced to equalize taxation with that on single-family houses. “Today’s property tax benefits high-income earners but disadvantages low-income earners,” says Åsa Hansson. Another area where, according to the proposal, taxation can be increased is VAT on various goods and services . The VAT can then be 25 percent on everything, instead of having a number of different VAT rates as today. The VAT on food, hotels and pub visits is, for example, 12 percent.Given the high inflation, is it possible to raise VAT now?
“It will be more difficult, but if you explain it well, it is not impossible. It is right now, in the midst of a crisis, that it is even more important that we have a good tax system. If the tax is collected in the best possible way, it also gives better opportunities to redistribute and help those who really need support.”The point of tax increases in certain areas is to be able to lower, among other things, the tax on work.”It is a problem with high taxes on low incomes , it makes it difficult to enter the labor market and contributes to exclusion. Unfortunately, most people don’t know what they pay in tax, there are so many different deductions and marginal effects.”The tax researcher wants to see an increased basic deduction for low incomes.”That would give a good signal effect. In addition, lowering the tax on higher incomes does not cost the treasury that much. It would also have beneficial effects on the labor supply.” In the tables below, Di shows the effects of a couple of different proposals included in the research report. This autumn, Åsa Hansson is traveling to the USA to teach and do research at Willams College, an elite university with a large proportion of tax research. And the connections to Swedish taxes are stronger than you might think.”Nothing in my report is really revolutionary. My research colleagues and I have been saying similar things for 20 years, but unfortunately not much is happening politically. The conclusions are also similar to those drawn in other countries.”