Reduction of employer contributions for persons working with research or development - increased ceiling for the deduction
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
I move for approval of the proposal because an increased reduction of employer contributions for research and development is crucial for Sweden's international competitiveness and productivity 1. M argues that it supports companies in tough economic times and that a raised ceiling can come into effect quickly without increasing the administrative burden 1. V moves for approval of the Left Party's reservation 2. V argues that the reductions are reckless towards the security systems as the cost is borne by the employees 2. V considers that the government is subsidizing large companies instead of investing targeted funds on research in future industries 2.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Caroline Högström (M)
Mr. Speaker! Today we are debating a bill that means the reduction of employer contributions for persons working with research and development is strengthened.
High-quality research is crucial for Sweden to be internationally competitive. It is also important so that the business sector and society as a whole can be provided with long-term competence and new innovations, which in turn leads to high productivity and growth. It is important that companies' opportunities to conduct research and development are strengthened, especially in a time of recession and high inflation.
Since the company that bears the cost of research and development cannot necessarily internalize the entire return on the investment, there is a risk that far too little research and development is conducted in relation to what is socio-economically optimal. This applies particularly in tough economic times. There are therefore reasons to support just such activities, which the proposal we are debating today actually does.
Mr. Speaker! Reducing companies' costs for conducting research and development in this way is not just a simple measure within the existing regulatory framework, but above all, it can lead to the amount actually increasing. A raised ceiling means that the change can come into force quickly and that the administrative burden for the affected companies does not necessarily increase.
The reduction of the employer contributions for persons working with research and development also has the advantage that it covers all industries as long as there is a commercial purpose with the research and development being conducted. This enables continued and, hopefully, also more research and development. It is something that is necessary for a safer, freer and greener Sweden.
Isabell Mixter (V)
Mr. Speaker! I want to begin by expressing my support for the Left Party's reservation.
That Sweden should be a country that is far ahead when it comes to research and development is extremely important and central to our society's development. To get there, public investments are required. Vänsterpartiet proposed 1 billion kronor extra for research in our autumn budget 2023. We know that research will be an important part of the climate transition but also for the development of society as a whole.
But to make further reductions of the employer contributions for companies with employees who work with research or development without knowing what the effect of the previous reductions has been is to act recklessly with our security systems and our welfare. The employer contributions go towards financing, among other things, the sickness benefit. In a report made by the National Audit Office on reductions of employer contributions, the conclusion is that the cost is borne by the employees.
The part of the employer contributions that is to go to the health insurance, the accident fund, and the occupational injury insurance has decreased significantly. Instead, what is called the general wage contribution has multiplied many times over. It was introduced in 1995 to finance Sweden's membership in the EU but was then only 1.5 percent of the wage.
The sickness insurance share has more than halved since 2006. And obviously, there is a connection between the fact that people who are ill and who should actually be entitled to compensation via sickness benefit are now denied compensation and that these payments into the systems have decreased.
The first reduction of employer contributions for persons working with research or development was introduced by the center-right government in 2014. In 2020, it was decided on a further reduction of the employer contributions for persons working with research or development by raising the ceiling for the deduction from 230,000 kronor to 450,000 kronor, while the general wage contribution was reduced by 10 percentage points on such remunerations to persons who work with precisely research or development. Vänsterpartiet voted against the proposal, which was nevertheless adopted by the Riksdag.
In 2021, it was decided to further strengthen this deduction by raising the ceiling and lowering the requirements for which employees are covered. Vänsterpartiet also voted against this. It was, however, adopted by the Riksdag.
The government is now proposing that the reduction of employer contributions for persons working with research or development be further strengthened. The maximum total deduction from the employer contributions that may be made for all persons working with research or development at the contribution-liable entity is increased from 600,000 kronor to 1.5 million kronor per month. This occurs at a time when we have very high inflation, and the government says that their primary goal is to combat inflation.
Mr. Speaker! Why do we not invest targeted at companies that are on their knees or in research and development in future industries that can grow? We need to transition society as soon as possible. But instead of investing money in what would make a difference, one wants to ensure the companies' profits.
Vänsterpartiet has criticized all proposals for reduced employer contributions for persons working with research or development because they have been poorly investigated.
The introduced possibilities for deductions have not been evaluated. No international comparison has been made. And there is an obvious risk that these permissive regulations will be misused so that this is used for people who do not even work with research or development. How large this risk is could have been analyzed if the previous changes had been evaluated. But it has not been done.
The Sweden Democrats wanted an evaluation of the effect of the reductions in employer contributions to be carried out when the previous decision on an increase of the deduction was made. Now they are in power and simply ignore how our welfare and our security systems should be able to function.
The proposed increase that the government is now putting forward is obviously aimed at large companies that have the possibility of making these deductions to the extent that will now become possible. Vänsterpartiet does not consider it a priority to subsidize just these large companies.
Arbetsförmedlingen assesses that a raised ceiling for the deduction would have a marginal effect on employment within this group and the extent of the work with research and development.
LO submitted a referral response in 2021 when the previous increase of the deduction was made. At that time, it was expressed in the following way: LO considers that there is an over-reliance on the idea that lower labor costs would increase employment and stimulate entrepreneurship. LO's general view is that support to businesses should occur on the expenditure side. In order for support to be expanded or extended, a clear requirement is clearly defined goals as well as a basis with demonstrable, positive effects of the support. Taxes and employer contributions shall be used to finance public activities as well as public insurance. LO considers that the government should cease treating taxes and employer contributions as something potentially harmful or as something whose purpose is to function as an economic steering tool.
The Left Party's view is that instead of dumping employer contributions, we must invest in allocating actual money in the budget for research and development. Anything else is to erode the system at the other end. The employer contributions are our money that we forgo in wages so that our security systems shall function.
I move for approval of the Left Party's reservation.
The deliberation was hereby concluded.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.