(cont. from § 12) The National Audit Office's report on changed income tax rules 2011-2023 (cont. SkU18)

Crister Carlsson (M)

Madam Speaker! We are now debating the Swedish National Audit Office's report on changed income tax rules 2011-2023. I begin by moving for approval of the committee's proposal for a decision.

The Swedish National Audit Office has audited the most significant changes to tax rules for capital gains implemented from 2011 to 2023. The audit shows that the changed tax rules have led to a reduction in income tax of a total of nearly 100 billion kronor. This covers several previous governments: the Reinfeldt government, the Löfven government, the Andersson government, and the current government.

The Swedish National Audit Office has examined whether the government has provided a good picture of how the proposed changes to the job tax credit and related tax rules create conditions for high employment, more hours worked, and a fairly distributed prosperity. The Swedish National Audit Office's overall conclusion is that the government has provided a partially embellished picture, and recommendations are provided on how the impact assessments in the bills can be improved.

The Government shares the Swedish National Audit Office's assessment that there have been deficiencies regarding the expected effects on employment, the number of hours worked, and income distribution in the consequence analyses of income tax proposals during the period in question. The Government also considers the recommendations that the Swedish National Audit Office provides to the Government regarding consequence analyses for income tax proposals to be reasonable and important.

Madam Speaker! It is the government's starting point to always describe the consequences of changed tax rules as correctly and accurately as possible. Distributional effects of income tax proposals are, in the normal case, reported for the entire population.

The Government shares the Swedish National Audit Office's view that relevant models are lacking for analyzing the elderly's labor supply. Such a model would have been desirable and useful in connection with the preparation of the proposal.

According to the review, the changes in income taxes between 2011 and 2023 have resulted in tax cuts of approximately 100 billion kronor per year, but the changes have led to the incentives to work being strengthened.

The National Audit Office's review confirms that there are very positive employment effects from lowering taxes on lower incomes and also ensuring that marginal taxes decrease. Therefore, it was good that the government, in the budget bill for 2024, introduced an enhanced job tax credit aimed primarily at full-time workers with low and medium incomes.

The effects will be that the incentives to work increase. The reduced income tax has led to higher employment and more hours worked. As a result of the reduced tax, fewer households are assessed to have a low economic standard.

The recent job tax credits of around 30 billion kronor have resulted in 25,000 more people entering employment, according to the Swedish National Audit Office. This, in turn, provides a larger tax base that increases the state's tax revenues, meaning that we can all get a larger piece of the big tax economic cake that we take from.

It needs to pay off better to work. Today we see a divided labor market where certain groups are caught in a squeeze and do not work to the same extent as other groups.

Swedish households have been hit by the troublesome economic situation through high interest rates and increased prices. The government's economic plan is therefore firm: Inflation shall be combated while vulnerable households and welfare are supported, the work principle shall be restored, and structural reforms shall be implemented to boost the low growth.

In 2016, the tapering of the job tax credit was introduced, and the Swedish National Audit Office shows that this has had significant negative effects on the number of hours worked and that it is doubtful whether it has led to increased tax revenues.

Madam Speaker! The National Audit Office recommends that the Government improve the impact assessments in bills containing tax proposals, including by reporting effects on employment and number of hours worked, regardless of which direction the effects point, and reporting qualitative impact assessments in cases where it is not possible with quantitative calculations.

(Applause)

The speech at riksdagen.se, in Swedish (opens in a new tab)

Ilona Szatmári Waldau (V)

Madam Speaker! The Swedish National Audit Office's review shows that tax cuts have been implemented without sufficient basis and sufficient analyses.

The review shows that the government – or rather the governments, since tax cuts made by both Social Democratic-led governments, Alliance governments, and the current right-conservative government are included in the review – has given an incomplete and partially embellished picture of how proposed changes to income taxation create conditions for high employment, more hours worked, and a fairly distributed prosperity. The Swedish National Audit Office assesses that the government should have more clearly reported the expected effects of the tax proposals so that the Riksdag would have had a better basis for decision-making.

The current tax policy guidelines that the Riksdag decided on in 2015 include, among other things, goals of a general and fairly distributed welfare and ensuring higher employment. The development has, however, gone in the wrong direction, and the gaps between people have increased and welfare has been eroded.

The National Audit Office notes that the self-financing rate is low, meaning that reduced taxes have not led to increased tax payments by people working more and longer. Reduced taxes instead mean reduced revenues for the state and thus less money for welfare, which ultimately means fewer hours worked as employees in welfare are laid off. Only the regions expect to reduce the number of employees by 5,600 people this year to make the budget balance, and both the state and municipalities are added to this. Reduced taxes therefore mean that fewer people work.

The starting point in the National Audit Office's review is that lower taxes lead to people working more or at least that this should be the goal. No reasoning is presented here that reduced tax revenues lead to reduced resources, which in turn leads to fewer employees in welfare.

Nor they do not take into account that almost all high-income earners already work full-time. Instead, it seems they assume that high-income earners will work more if they get to keep more of their wages from overtime and extra work. This view is, of course, not the fault of the Swedish National Audit Office, but it is how all governments have reasoned during the audit period when they have lowered taxes.

We have today a society where some are already working too much and are becoming exhausted and burnt out, while others do not have a job to go to. To then pursue a tax policy that aims for some, namely high-income earners, to work even more is backward. Should the doctor who already works long shifts add another shift? Should the manager who hardly sees their children settle in at work?

At its core, this says something about one's view of people. The healthcare assistant should have such a low wage that they must work extra to make the finances work. The CEO is to receive more in their pocket to be encouraged to work more. These are different conditions for different people.

Madam Speaker! When the Social Democrats and the Green Party abolished the wealth tax to form a government with the support of the Centre Party and the Liberals, they gave the worker with a monthly income of 25,000 a tax reduction of approximately 20 kronor a month, while those who earned 70,000 received almost 1,000 kronor a month in tax reduction. Even higher incomes gave even larger tax reductions, on average 67,000 kronor a month in tax reduction for the 50 top executives who are part of Sweden's economic elite, according to a calculation made by LO.

What Sweden needs now is a new major tax reform that increases tax revenues, protects welfare, and strengthens the uniformity of the tax system - a tax system that protects low-income earners and taxes high-income earners and wealth.

The Swedish National Audit Office proceeds from an accepted assumption that lower taxes in the long term lead to higher employment and more hours worked. At the same time, there are several studies that do not support this assumption. Some researchers see tendencies that, for example, high-income earners work less if they receive a tax cut. Another example is a research study showing that lower taxes for high-income earners increase economic inequality without significantly affecting unemployment or economic growth. The research provides no clear answer on how strong the potential connection between taxes and employment is in Sweden. The only thing that is completely certain is that tax cuts lead to reduced tax revenues.

I also note that the simulation models that have been an important part of the National Audit Office's calculations are influenced by which factors are fed into the model and thus cannot be seen as facts.

When the Social Democratic government removed the defense tax, they proceeded from the same simulation models and did no analysis of where the 6.1 billion that disappeared from the state budget would be taken from. Today we can state that the billions that have disappeared from the state budget as a result of tax cuts by both bourgeois and Social Democratic-led governments would be needed for a welfare system that functions.

With this, Madam Speaker, I have nothing else to state or to vote in favor of other than the Committee on Taxation's proposal for a decision.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Annika Hirvonen (MP)

Madam Speaker! I will not prolong the debate much. Most of it has already been said. We can jointly observe that the Swedish National Audit Office's report shows that the calculations of how various tax cuts would be self-financing have simply been far too optimistic. This indicates that the models need to be reworked and that tax cuts simply do not finance themselves to the extent that has been expected over the years.

We from the Green Party's side think that the taxation needs to be reviewed and, not least, that the taxation of work needs to be leveled out in relation to the much lower taxation that applies to people who make money from the fact that they already own a lot. It is one of the most important reforms. We think it is important that the government moves forward and adopts the recommendations so that there will be a better reporting in the future.

I would also like to say a few words about the question of the elderly's labor supply. Even though it is difficult to produce models that can predict how reforms affect how much older people choose to work or not, I believe that question is important to keep an eye on moving forward. As we get an increasingly older population, we need more knowledge about what affects the elderly's opportunities and willingness to continue working. It is, of course, not just a question of taxes. I am convinced that issues linked to health and the possibility of working less, choosing for oneself how much one should work and having more flexibility, can play a very significant role. I still think it is worth mentioning because the government is content to state that it is difficult.

The deliberation was hereby concluded.

(A decision was to be taken on 4 April.)

The speech at riksdagen.se, in Swedish (opens in a new tab)