Paused adjustment of the threshold for state income tax for the 2024 tax year

Sofie Eriksson (S)

Madam Speaker! It is good that the government has now acknowledged its incorrect decision last year to raise the threshold for state income tax by a historically large amount. It has been acknowledged that it was wrong to [give] 13 billion kronor to inflation-protected stock CEOs and other high-earners while healthcare is on its knees and ordinary people have seen ten years of real wage increases disappear.

We Social Democrats stand behind the committee's proposal not to make this mistake again. We already proposed last year that the calculation should be paused given the extreme situation we have in the economy. At that time, the Moderates and Sweden Democrats questioned our morality, and now you are doing the same thing yourselves.

The proportion that pays state income tax this year is estimated at 11 percent, which is the lowest proportion since the tax was introduced in 1991. With a paused indexation, the proportion is instead estimated to amount to 13 percent, which is the second lowest level since the introduction. Those who are now worried about a departure from some kind of principle can therefore be at ease.

Madam Speaker! Our country is undergoing the most difficult economic crisis since the 90s. Inflation has reached record high levels, the Swedish economy is shrinking, and unemployment is rising. It hits households hard. Ordinary families with ordinary incomes are finding it increasingly difficult to pay the bills. I repeat: Ten years of real wage increases are swept away.

It is almost Christmas and New Year, Madam Speaker. There is food to be purchased and Christmas presents that are on wish lists. I remember what it was like to be a child on Christmas morning. I had a friend who called and asked what I had received from Santa Claus. Actually, I think she mostly wanted to tell me about her own presents.

My friend told me that she had received an annual pass to a ski resort, a snowboard, a curler, and a toiletry bag with "a little makeup." Everyone who wears makeup knows that it involves quite a lot of money. She had also received a new game console and "a few games." In my head, the calculator was running at full speed.

In school, the same question was asked among the children. The guy who walked around all winter with torn jeans - this was before it was cool - laughed off the question and said that he "doesn't give a damn about Christmas presents." I apologize for the language. In the end, it still came out that he had received socks, period.

Clearer than that, the class divides may not become for a child. And this year, there will be many children who are forced to laugh away that with Christmas presents and who do not want to tell their classmates what they received. There will be many parents who, with a heavy heart, take out quick loans to avoid that feeling in their children.

Madam Speaker! Inequality in Sweden has grown explosively, and it is felt in the bodies of the people. Taxes have been lowered in a way that has increased the differences, to the benefit of those who live on the return on capital and to the detriment of the vast majority of people in Sweden.

The tax cuts have resulted in cuts to welfare. It concerns that which the vast majority of people in Sweden cannot afford to pay out of their own pockets – and especially not when the needs become great for reasons that one often cannot influence oneself, such as when the child needs extra support in school or when one gets cancer and needs medicine and treatment. One might be involved in a workplace accident that causes the ability to work to never again be as it was. One might suffer childbirth injuries. One gets older and needs care from home services.

When taxes are lowered, the funding of the welfare state decreases. Then the pressure on private financing increases. How many can afford that? The world's most expensive healthcare system withholds care from its citizens. During the pandemic, approximately 44 percent of the US population said they avoided care because they could not afford it. Large parts of the population are completely uninsured. Is it going to end up like that here in Sweden too? The situation is acute in the welfare state in today's Sweden. Healthcare in our country is heading towards a deficit that is larger than during the 90s crisis - in one of the world's richest countries.

Madam Speaker! We need more teachers, student assistants, nursing assistants and nurses - not fewer. It requires stable funding. The state should make efforts to support families. We Social Democrats have presented proposals to double the money for healthcare, to make an extra payment of the child allowance, to increase the maintenance support and index the money for welfare, among many other things.

We want to finance it, among other things, by, just as the government proposes, pausing the upward adjustment of the threshold for state income tax, but also through a bank tax on capital gains.

It is good that the government has acknowledged that it was unreasonable to let the threshold for state income tax be increased so significantly at the same time as the needs are great. But one should have realized that already last year.

Madam Speaker! One must also remember one thing. Despite the fact that the indexing of the threshold is now paused for 2024, it will still be totally larger than the wage increase rate between 2022 and 2024. This means that high-income earners will still have been overcompensated despite this decision.

Madam Speaker! I will soon conclude my speech. But I still want to return a little bit to last year when the right argued for lowering the tax for high-income earners. Then it was said a bit like this: It does not pay for high-earners to work, struggle and toil if they do not get further reduced tax.

I will therefore conclude with a small summarizing reflection, call it a poem if you wish.

Some children are born with backpacks filled with helium. Every step weighs feather-light. Along the way, new opportunities stand in long rows, waiting. Other children are born with backs weighted by lead. For them, the smallest mistake is a storm to parry. The one who struggles hard deserves more, they say. Who struggles? Who does not? What happens when we actually answer that question?

(Applause)

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Crister Carlsson (M)

Madam Speaker! I agree that we are in difficult times now, absolutely. But I do not understand the logic in the government now realizing its big mistake or that the government would regret what concerns the increase of the threshold earlier and now pause it. We had a completely different threshold earlier than what we have today. The logic does not add up there. It would be different if we were to have had the same threshold.

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Sofie Eriksson (S)

Madam Speaker! I understand that the Moderates do not want to call it an admission that we were right. I can respect that they do not want to say that.

We currently have the lowest proportion paying state income tax since the tax was introduced. It is not as if the economy was less tough last year or that the situation was less extraordinary then than it is now.

It is 13 billion kronor that this year did not go towards stopping cuts in healthcare. We see how people are being laid off. It is hundreds of people in a single region. It is 700 there, 600 there and 500 there. It is healthcare staff who are disappearing and who cannot deal with the healthcare queues and cannot meet the need that exists, for example, in child psychiatry.

One might wonder: Was it right, Crister Carlsson, to prioritize 13 billion kronor for, for example, us in here, the CEOs of the stock exchange, the members of the Swedish government and the high-income earners? Was it right to spend that money on them when instead one could have avoided cuts or even been able to hire a few more in the welfare that many in here often say they protect?

When it comes to the actual results, they did not do it. Now we see a healthcare crisis that is forced by the government. It could have done things differently. It now shows that what we said last year was right, because it can obviously do this now. But we have a lost year because of the government.

I think that is how it is. We succeeded in our argumentation, and that is positive. I thank you for the reassessment. But it is a problem that this year became a lost year.

(Applause)

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Crister Carlsson (M)

Madam Speaker! Now we are starting to enter into a healthcare debate here, something that was not actually the intention. But I must, of course, answer the question.

The Social Democrats have previously spoken about healthcare slaughter and other things. I had RUT calculate the difference in our region regarding the Social Democratic budget and the Tidö parties' budget. That was in the spring. I do not believe there is any major difference in the budgets now.

For our region, it differed by 49 million kronor. Our region is running at a deficit of approximately 700 million kronor. I do not see any major difference between the Social Democrats' budget and the Tidö parties' budget for our region. I believe that, generally speaking, it looks roughly the same in the rest of Sweden depending on the size of the regions.

Our region would have received 49 million more in the general state grants with the Social Democrats' budget, and it is running a deficit of 700 million. How big is that difference, how big is the impact, and how many more could we hire with the Social Democrats' budget compared to the Tidö parties' budget?

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Sofie Eriksson (S)

Madam Speaker! I have not had the opportunity to look at the figures. I will gladly do so after the debate. I believe that the figures should be higher if we look at the current year's budget alternative.

One can also note that it was precisely Crister Carlsson who was in power in Region Dalarna before the shift in power. The deficit that one has now, perhaps he himself has been involved in influencing.

If it is 49 million, it is still more than being without the 49 million. Or is there someone in here who thinks that 49 million is a pittance that doesn't matter? I do not think so.

I believe, as I said, that the figure should be higher. The different calculations that I have seen before have shown that. But where did the 49 million go? They went, among other things, to people who already have high salaries.

It is that trade-off that we are discussing right here and now. Would that money have gone to Region Dalarna, Region Sörmland, Region Skåne, Region Norrbotten, Region Västerbotten or Region Jämtland Härjedalen? Or would it have gone to us? That is exactly what happened; it was we who received the 49 million and the 13 billion in total, instead of our various healthcare regions.

I think it was wrong. Crister Carlsson argues that it doesn't count. It doesn't matter. The question is when it starts to matter. How much less should the healthcare regions receive for Crister Carlsson to think it is a lot?

It ultimately comes down to how one prioritizes. We would have wanted the 13 billion kronor to have gone to other things than to high-paid individuals in our country.

(Applause)

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Helena Lindahl (C)

Madam Speaker! I have already touched upon the subject in the tax round of the debate, that is to say, the threshold for state income tax, so I shall try not to be altogether too long-winded.

It is no secret that the Center Party thinks the government's decision to pause the indexing of the threshold for state income tax was surprising. One thing is that it partially breaks with practice. The Social Democrats were first on the ball in that matter, and it is very surprising that a bourgeois government does the same thing. We understand that it involves a lot of money, especially in times of inflation. The Center Party has, however, proposed another model to protect the tax scale against continued arbitrariness and to mitigate the marginal tax increase for more people, especially for people in shortage occupations.

The debate about high-income earners is very loud. Everything is black or white, and it is ugly to earn money. But one must remember that the reduction or pausing of the increase for the threshold for state income tax hits a number of shortage occupations that society is in need of. Let me list a few: doctors, young engineers, dentists, experienced police officers, specialist nurses who have uncomfortable working hours with several.

Do you really think that people want to educate themselves for these types of jobs if they cross the threshold and have to pay state income tax? Do you really think that a nurse in Region Västerbotten, Region Dalarna, or wherever it may be, has the desire to work overtime over Christmas if he or she has everything taxed away? We must realize that Sweden is dependent on these different groups. There is also a skills shortage in this country.

I must say: Lower the tone in the debate! These are people whom we absolutely need in Sweden.

I will conclude by saying that I am very concerned. If one deviates from this practice without compensating with something else, it means that one opens Pandora's box. Previously, we heard representatives for the Socialdemokraterna practically say that this suspension should have occurred a long time ago.

Perhaps the Social Democrats also want even more people to pay this state tax. How far down should we go? How many preschool teachers or primary school teachers will this affect? I think one needs to consider such things before creating this high tone.

As said: Do not open Pandora's box! If you do, I am afraid it will have major consequences, not least in the shortage occupations that we have right now.

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Crister Carlsson (M)

Madam Speaker! I begin by moving to approve the committee's proposal for a decision.

One of the government's primary priorities is to combat inflation and ease the cost pressure on households. The government is also working to create better conditions for the economy to grow in the long term. Good economic growth lays the foundation for a society that grows and becomes stronger, and a society where more people support themselves and contribute to the investments in the justice system, defense, and welfare that are necessary.

Sweden is in a tough economic situation with the highest inflation in 30 years. It is admittedly on its way down, but one should not celebrate just yet. The rising prices pressure households and companies but also welfare. If inflation remains stuck at a high level for a longer period, people who are already struggling today to make ends meet will find it even tougher. It would likely also lead to long-term damage to the economy.

The government's plan to manage the troublesome situation in the economy consists of three parts. It involves, among other things, conducting a restrained fiscal policy so as not to risk inflation running away and becoming even higher. The government also supports households and welfare financially.

Madam Speaker! If Sweden is to succeed in solving society's problems, the labor market needs to function better than it does today. Too many people risk falling into long-term unemployment, which leads to increased exclusion, especially among those born abroad.

A prerequisite for the Swedish welfare model is that everyone who can work strives to obtain a job. Therefore, it must always be more profitable to work than to support oneself on benefits. To make it more profitable to work, the government lowers the tax for primarily low- and middle-income earners. A benefit reform is also being implemented to counteract people falling into benefit dependency.

Reduced tax on earned income is the reform that the government is investing the most in in its budget for next year. In total, Swedish wage earners are estimated to pay 11 billion kronor less in tax next year by strengthening the earned income tax credit that has existed previously.

The paused threshold and the investment in tax cuts are aimed at low- and middle-income earners who work full-time. For the income year 2023, the so-called threshold is 598,500 kronor. This means that you pay 20 percent in state income tax on your income above this threshold. The threshold applies to the taxable earned income, that is, the income you have after the basic deduction has been subtracted.

There are two breaking points - one for those who have not turned 66 at the beginning of the year and one for those who have turned 66 at the beginning of the year. Those who have turned 66 have a higher breaking point than the younger ones. This will be an extra carrot to get more elderly people to stay in their profession and contribute to reducing the skills shortage.

Inflation, Madam Speaker, is the worker's greatest enemy. It makes food more expensive and interest rates go up. It causes great problems for households. It drains household budgets, and ordinary wage earners see their real wages decrease. Our primary focus is therefore to combat inflation through a restrained and funded budget that leads to lowered interest rates.

We are therefore lowering the tax for ordinary wage earners. In total, we are lowering the tax broadly for those who work, and who have worked, by 13 billion kronor. This leads to significant supplements for households. For example, a family with a police officer and a nurse receives more than 14,000 in lowered tax in 2024 compared to 2023 as a result of the job tax deduction and the indexation of previous job tax deductions and the basic deduction.

To finance this, the government proposes that the upward adjustment of the threshold be paused. The adjustment that was carried out last year was completely correct and proper, but at the same time historically high, which means that the number of people paying state income tax today is the lowest ever.

We must also stimulate the nurse who works a lot of extra shifts and the one who has completed a long education, has large student loans, and has lost wages during the period of education, by ensuring they get to keep a portion of the salary they have earned.

Many may think that one should not have paused the calculation of the threshold, but in fact, fewer people will pay state income tax in 2024 than was the case in 2022. This therefore covers two years.

The previous decision was correct. The intention with it was not to make more people state taxpayers, and we fulfilled this. We must return to how it shall be next year. There may be other methods of calculation that are better; I know that this is being looked into. We must look at the model for how the threshold shall be calculated.

(Applause)

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Helena Lindahl (C)

Madam Speaker! Since I was so worked up in my speech, I forgot to move for the approval of the Center Party's reservation. I take the opportunity to do so now.

I also want to thank my fellow member for the speech and the opportunity to review other models regarding the threshold. I believe it will be needed in the future. I am very pleased that the member has listened, and perhaps there is an opportunity to discuss this issue further.

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Crister Carlsson (M)

Madam Speaker! I know that people are considering different models for this calculation. With that, I thank you for the floor.

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Sofie Eriksson (S)

Madam Speaker! Thank you, Crister Carlsson, for your speech!

I would like to ask a question. In previous rounds of debate, we heard from the Moderate Boriana Åberg that the tax level will be the lowest since 1975, something that I understand the Moderates and other parties are very happy about. At the same time, we have a healthcare crisis. Teaching assistants are being laid off, and it is difficult to meet the need for preventive measures against crime in our municipalities and so on.

I would like to ask Crister Carlsson what his dream scenario is. If we are now going to have the lowest tax level since 1975, when childcare and elderly care were not included in the welfare system as they are now and the proportion of elderly people was smaller, which meant that the welfare system did less than it does today – what is then Crister Carlsson's dream scenario regarding the tax level, and what will the welfare system look like then?

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Crister Carlsson (M)

Madam Speaker! What my dream situation is? I do not quite understand the question. I want to lower taxes for everyone. If one lowers taxes so that more people get into jobs, it may result in that, overall, more people contribute with tax revenues to our welfare.

With more people working and paying slightly less tax, perhaps we might get even greater tax revenues for the state. That is what I dream of in that case.

(Applause)

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Sofie Eriksson (S)

Madam Speaker! The reality we live in is that a number of abolished taxes in combination with other lowered taxes have led us to a tax level which, according to the Moderaterna themselves, is the lowest since 1975. At that time, we did not have childcare in the same way as today, and elderly care was not included in the welfare state as it is today. Unemployment was admittedly lower, but the proportion of elderly was also significantly smaller. Healthcare could not cure as many as today. Many chronic patients could not get the care they needed, simply because medical development had not gone as far.

It was simply a matter that the welfare could do less and did less. The taxes of that time would suffice for significantly less than today. This is completely obvious if you go out to any health center, emergency room, or school and talk to teachers and others who have studied for five years. Are they very satisfied with their salaries? Are they very satisfied with their working environment?

What I am trying to say is that tax cuts and the abolition of a lot of taxes have led to cuts in welfare, and since the party I am now debating with wants continued heavily lowered taxes, one would like to know what the goal is. How low are the taxes to become? What will our welfare look like then, when it looks the way it does today after the large tax cuts that have been implemented?

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Crister Carlsson (M)

Madam Speaker! I do not draw the parallel between increased taxes and higher welfare and higher wages for healthcare and care personnel. I see more people in work, and we see that by lowering taxes so that it becomes profitable to work.

One thinks that it is good to take extra shifts. I have experience of that myself. If you have to pay a lot of taxes, the interest or motivation to work naturally becomes less.

I believe in lower taxes, and I believe that lower taxes lead to more people getting jobs. One might work a little extra, and thereby the tax revenues will become larger.

So is my thought, and I truly believe in it.

(Applause)

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Ilona Szatmári Waldau (V)

Madam Speaker! It has surely not escaped anyone by this point that the debate is about the government proposing that the threshold for state income tax for the tax year 2024 should be paused. This is something that we in Vänsterpartiet support. During 2023, the threshold was adjusted upwards. Those with higher incomes were compensated for inflation, while those with lower incomes had to tighten their belts. We Members of Parliament, for example, received a modest tax reduction of about 1,400 kronor per month this year, while those who earn under 46,200 kronor per month this year did not receive a single krona in inflation compensation.

Preschool teachers, teachers, nurses, nursing assistants and other professional groups in the welfare sector do not get a single krona, but instead see the gap to well-paid positions increase even more, while the government has not provided enough to municipalities and regions this year for them to meet the challenges of the welfare sector.

Employees in the welfare sector have this year had fewer colleagues, more pressured schedules, and less room for wage increases. They have had it tougher with the economy at home, and they have also had it tougher with the economy at work. The upward adjustment of the threshold for 2023 was something that Vänsterpartiet strongly opposed, because a pause already in 2023 had meant that we could have increased the state grants to municipalities and regions for a better welfare.

The calculation of the threshold for the tax year 2023 was historically high. This means that the proportion paying state income tax this year is historically low. In total, the government spent 13 billion kronor on these tax cuts, while municipalities and regions did not receive the state grants they needed.

Vänsterpartiet welcomes the paused indexation, as said, but we do not share the government's proposal that it should finance other tax cuts. The paused indexation should instead be used to strengthen the welfare system.

In our budget, we reject the new job tax credit which increases the tax gap between those who receive a share of the job tax credit and those who live on sickness and activity compensation, unemployment insurance and parental insurance to give some examples. We want to close the tax gap, not increase it.

With this, I vote in favor of the committee's proposal in the report.

(Applause)

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Cecilia Engström (KD)

Madam Speaker! Sweden has now passed the inflation peak, and inflation is falling slowly. The development is going too slowly, but the trend is clear. By the end of next year, inflation is expected to stabilize around the target of 2 percent. This means that the Riksbank's sharp interest rate hikes are hopefully at an end.

The Christian Democrats argue that a policy for entrepreneurship and growth is the key to continued welfare. It is therefore time to lift our gaze from acute crisis management to a more business-friendly and growth-promoting policy. Structural reforms are needed for increased growth and productivity.

The Christian Democrats argue that there are some particularly important fundamentals in these structural reforms, and one of the most important is that the incentives for self-sufficiency must increase. It should always pay to work rather than go on benefits.

When people move from exclusion to employment, it is a gain not only for the individual but also for society. It increases tax revenues and reduces the need for benefits. But it is also a gain for the individual on a moral and social level. The knowledge that I can support myself and my family provides an inner strength and security that state and municipal benefits can never provide.

Madam Speaker! The Government's work to strengthen the incentives for work includes reforms, for example, benefit ceilings and qualification for welfare. Other important parts are that welfare benefits must not be allowed to passivize people. Passive receipt of social assistance is devastating for the individual's trust in their own ability and involves a risk of living a life of exclusion. This must be broken through activity requirements in order to receive social assistance.

A particularly important consequence of high inflation is that it erodes the incentives for work. Most benefits in the social insurance systems are adjusted for inflation, while employees have seen their purchasing power heavily eroded by inflation. It is therefore important to prioritize the work of continued income tax cuts on work in the form of additional job tax credits. To further increase the incentives to work and to create a good distributional policy profile, it is important that continued tax cuts have a clear focus on low- and middle-income earners.

Madam Speaker! High marginal taxes already at relatively moderate incomes erode the willingness to work extra and the incentives to pursue higher studies. When the pillars of the welfare state in the form of ordinary nurses and police officers are forced to pay more than half of an income increase in tax, it affects not only the individual but also society. The Christian Democrats' stated goal is that the proportion of workers who pay state marginal tax shall decrease.

Politics is about having the will, but also having the courage to prioritize when one cannot do everything at the same time. The Christian Democrats and the government dare to make these prioritizations, and therefore we choose this time to pause the increase of the threshold for state income tax in order to instead prioritize the reforms driven by the work line. We do this by further lowering the job tax deduction; a well-balanced reform that benefits low and middle-income earners most. The job tax deduction overall represents a powerful stimulus for the individual to move from unemployment to work. It simultaneously benefits society by increased employment increasing the resources for the common welfare. It is good for the individual, but it is also good for Sweden.

I vote in favor of the committee's proposal.

(Applause)

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Linus Lakso (MP)

Madam Speaker! Miljöpartiet welcomes that the government is pausing the upward adjustment of the threshold for state income tax this year. We believe that it should have been done already before this year. The adjustment that took place before this year was very high due to the high inflation, which in practice meant large tax cuts for high-income earners. We consider this to be an incorrect prioritization in a situation where many with lower incomes have been, and are, in a tough economic situation. Welfare also faces major cuts as a consequence of not having provided sufficient funds.

Miljöpartiet considers that in the current economic situation, it is not a priority to lower taxes for those who earn the most, but our priority instead is to give municipalities and regions the economic conditions required to avoid the austerity measures that welfare is now facing.

The deliberation was hereby concluded.

(Decisions were made under § 13.)

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