The National Audit Office's report on temporary deferrals of tax payments
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
S considers the government's policy during the pandemic to have been wise, necessary, and successful as it strengthened liquidity for viable companies and saved thousands of jobs 1. S argues that the state must be able to act when the market hesitates 1. SD considers that temporary deferrals have been a valuable tool, but that there are deficiencies in precision and cost control 2. SD proposes carry back as a complement to provide companies with rapid liquidity reinforcement 2. M argues that the deferrals and other supports during the pandemic were initiated by the Moderates 3. M considers that the government should not limit the possibility of deferrals when the credit market does not function normally 3.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Mathias Tegnér (S)
Mr. Speaker! Today we are debating the Committee on Taxation's report 7, which concerns the Swedish National Audit Office's report on the temporary deferrals for the payment of tax for companies during the pandemic.
The pandemic may seem to belong to our past, but it is nevertheless important that we now analyze the policy pursued at that time. The National Audit Office's report clearly shows that much of the policy pursued by the S-led government during the pandemic was wise, necessary, and fundamentally successful.
The temporary deferrals for tax payments were a measure that had fundamentally been legislated almost a decade before it was used, but when it was put into use during the pandemic, the final touches were made to the legislation in an exceptional situation and under time pressure, especially when we speak about the entirety of the measures.
Nevertheless, we can observe that the measures as a whole fulfilled their purpose. Liquidity was strengthened for fundamentally viable companies here in our country. Those were the types of trade-offs that politics faced during the pandemic. How do we help both companies and households in crisis? How do we create help for viable companies without throwing good money after bad? How can we protect the taxpayers' money and at the same time pave the way for future growth?
So, that is how the trade-offs looked five or six years ago. That is how they look today, and that is also how they looked when the legislation fundamentally arrived at the end of the 00s.
Mr. Speaker! Concretely, the S-led government's policy meant that thousands of jobs could actually be saved, that companies could continue to pay out wages, and that the Swedish economy stood firm through one of the most difficult crises in modern times.
The contrast to the current government is stark. With Kristersson at the helm, 100,000 people have become unemployed. Growth is at the bottom of Europe, and every fourth young person in our country is unemployed – while taxes are lowered for the very richest. It is striking that, for example, Jimmie Åkesson has lowered the tax for himself by 4,000 kronor – every month, Mr. Speaker. Every member in this chamber has lowered their own tax by 2,500 kronor, thus 30,000 kronor per year. At the same time, the unemployment insurance is deteriorating, and the regions and healthcare are being put on a starvation diet. The number of unemployed is increasing.
I will think of a Muf-pin from the 90s that was very popular among some: Make the Prime Minister unemployed so you don't have to become one yourself. For me, it is obvious when I read this Riksrevision report that it makes a difference whether the Prime Minister is Moderate or Social Democrat.
Mr. Speaker! Regarding the pandemic measures, it is of course easy to say in hindsight that things should have been done in a different way. But during the pandemic, the reality was different. Then, decisiveness was needed, not hindsight. Measures were needed, and therefore I am extra glad that the decisions nevertheless were well-considered. This also applies to the regulation of temporary deferrals for companies. I was myself a Member of Parliament in the Committee on Enterprise during the pandemic and remember how certain parties wanted to spread taxpayers' money around in a way that would have made Gunnar Sträng turn in his grave.
Mr. Speaker! The National Audit Office nevertheless points out certain deficiencies in the accuracy and the follow-up. We must, of course, take that seriously. But the overall conclusion remains clear to me nonetheless: The measure was fundamentally effective – the temporary deferrals fulfilled their purpose. All in all, one must still say that the S-led government's policy did what was required to protect Swedish companies and employees.
I also want to remind – and I think this is important – that the temporary deferrals were not an isolated initiative but part of a broad palette of crisis measures, such as layoff support, turnover support, and state guarantees. Together, they contributed to Sweden managing the crisis better than many other countries.
Mr. Speaker! The Sweden Democrats, in their special statement, have chosen to highlight a different tool than the one we are discussing today, namely the so-called carry back model, where companies can offset losses against previous profits. It may sound technical to many, but in practice, it means that the state pays back taxes that have already been earned.
Therefore, I would like to ask a few questions to the Sweden Democrats. Is this a proposal that you stand behind even when there is no pandemic, or do you see it as a reasonable pandemic measure? The one seeking an answer to this in your specific statement will, in fact, search in vain. I would also like to know how you intend for the control of such a carry-back system to function, given that the risk of fraud in such a system is documented to be greater than in the system that Sweden used during the pandemic. Member Wiechel, who follows me, is welcome to answer this.
Mr. Speaker! We Social Democrats stand for a responsible policy in everyday life just as much as in a crisis. The Social Democrats are a party to trust and to lean on when the storm blows up. It is a party that dares to make decisions when it is needed and that is ready to act, with consideration for both wage earners and entrepreneurs. But we are also a reformist party that fundamentally wants to develop our fine Sweden and not demolish what has been built up over generations.
The pandemic showed that the state must be able to act when the market hesitates. Therefore, I think it is good that the government, in its communication, marks that temporary deferrals can be justified even when uncertainty is great and not only when the credit market has actually already collapsed.
Mr. Speaker! We will, of course, learn lessons from the crisis, but we must also dare to say what is sometimes forgotten. Much of the S-led policy that was conducted during the pandemic was not only right – it was actually absolutely crucial for Sweden to fare as well during the pandemic as we actually did.
Markus Wiechel (SD)
Mr. Speaker! Today we are, as you know, discussing the Swedish National Audit Office's report on temporary deferrals of tax payments, which is a measure introduced during the financial crisis of 2008–2009 and which has later been adapted, not least during the covid-19 pandemic. The purpose has been to support sound and viable companies with temporary liquidity problems. The Swedish National Audit Office's audit has also shown that the measure in large has been effective. But there are still deficiencies and, of course, also opportunities for improvements.
From the Sweden Democrats, we also have, as previously mentioned, in light of this, put forward a proposal to introduce carry back as a complement to today's system. I will, of course, return to this shortly.
Let me begin with a general reflection before I move on to our proposal. Temporary deferrals of tax payments have been an important tool to give companies the breathing room they need during crises. During the pandemic, companies could postpone payments of employer contributions, withheld tax, or VAT, which provided a rapid liquidity boost.
The National Audit Office notes that in many cases this has functioned well, especially for companies that were hit hard by restrictions or by the uncertainty in the market. But the report also points out deficiencies. The accuracy has not always been completely optimal. The state's net cost also became clearly higher than expected. According to the National Audit Office, it landed at 9.8 billion kronor, which is a quite large difference compared to the estimated 2.8 billion. It is therefore a difference of a full 7 billion that we are talking about.
Mr. Speaker! Let me now move on to the special statement from us Sverigedemokrater, where we raise the idea of introducing a possibility for so-called carry back in the Swedish corporate tax system. This is a measure that has been used successfully in several countries, including the USA, the UK and Canada, and which we believe could potentially complement the deferral provisions in an effective way.
What does carry back mean then? Today, companies that incur a loss can only offset it against future profits, so-called carry forward. The problem is that future profits are uncertain, especially in a crisis, which means that companies can be forced to bear a financial risk for a very long time. This can, of course, hit them very hard. With carry back, companies could instead offset this year's loss against profits from previous years and get back already paid tax, as early as the year after the loss year. This could provide a quick injection of liquidity and strengthen the companies' solvency – this applies particularly to companies that have already proven to be profitable before the crisis hit.
Take, for example, a small business that has been profitable for several years. One has paid tax and built up a stable operation. When a crisis similar to the pandemic we went through not so long ago strikes and causes a temporary loss, the company can quickly end up in liquidity problems. With carry back, the company could get back some of the tax that was previously paid in, which gives the company the opportunity to bridge the crisis without having to take out expensive loans or risk bankruptcy. This is particularly important because the credit market, as we have seen, does not always function normally in times of crisis.
Mr. Speaker! Carry back would not only help individual companies. It also helps the entire society, because companies are the engine of society. It helps the entire economy, which we are dependent on.
By giving profitable companies a chance to recover quickly, we reduce the risk of bankruptcies and unemployment. It can be a precise measure targeting companies that have already proven their viability, in contrast to more general support that risks going to less serious actors. Furthermore, it is a measure that can be implemented relatively quickly, which can be crucial in an acute crisis.
To clarify: We therefore see carry back as a potential complement to the deferral provisions. While deferral provides temporary relief by postponing tax payments, carry back provides a more direct liquidity boost through the refund of already paid tax. Together, these measures can create robust support for companies in crisis without the state taking on disproportionate risks.
As a quick response to Mathias Tegnér, I want to say that these are quite complex issues. It is precisely for that reason that we see the need to highlight this as a potential tool in the future, so that we can work with it jointly. But as we know, we have no concrete proposal for the simple reason that the whole thing is quite complex.
Mr. Speaker! Let me conclude by saying that temporary deferrals of tax payments have been a valuable tool to support companies in crisis. The National Audit Office's report shows, however, that there is room for improvement. We need clear criteria, better controls, and a more realistic assessment of the costs. At the same time, we need to dare to think anew. That is why we have submitted our special statement. For us as a business-friendly party, it will be very interesting to follow this issue further.
With this said, I would like to move for approval of the committee's proposal for a decision.
Boriana Åberg (M)
Mr. Speaker! On February 27, the Committee on Taxation received information from State Auditor Christina Gellerbrant Hagberg regarding the National Audit Office's audit report on temporary deferrals of tax payments. The Government submitted its response to the report on June 5, and today, October 22, we are debating the matter. Thus, we have had a long time to sharpen our arguments, just over eight months. "Debating" may not be the right word because the committee has nothing to object to regarding the Government's assessments. The proposal for a parliamentary decision is to submit the Government's response to the National Audit Office's report to the records.
We are not debating the government's response, but those who have listened to the debate so far have heard Mathias Tegnér's unbridled pride regarding the measures that were introduced during the pandemic. I must say that even though we had a Social Democratic government then, the initiatives for the supplementary budget and various supports for companies, including the deferrals for tax payments, were on the Moderates' initiative. The majority at that time has reason to be proud that they were able to cooperate with the opposition in a difficult situation, but to take all the credit is not quite honest, I think.
I also noticed that Mathias Tegnér wanted to take the opportunity to criticize the current Moderate-led government for conducting a policy that Mathias Tegnér does not like. I want to say that we are proud of the policy we are conducting. It is a policy for people who work. It should pay to work, and it should pay to have worked.
The policy we have pursued has led to the fact that the inflation of over 10 percent, which we inherited from the Social Democrats, is now at low levels. This has led to lowered interest rates – a very important factor for people who have loans on their houses. I could speak very much about this, but I shall return to the matter we are debating today.
The reports from the Swedish National Audit Office are always worth reading, and the one we are discussing today is no exception. The report examines whether the possibility of obtaining temporary deferrals of tax payments has been an effective measure during the pandemic and the years that followed. They were undeniably difficult years. The outbreak of covid-19 at the beginning of 2020 was a shock for the entire Swedish society and for the economy. There was great uncertainty regarding the effects on both public health and the economy.
After the pandemic came the next crisis with sharply rising electricity prices and an inflation of 10 percent. The purpose of temporary deferrals of tax payments was to support fundamentally sound and viable companies during a time when many faced liquidity problems.
The Swedish National Audit Office's overall assessment is that the temporary deferrals have been a relatively effective measure. However, certain shortcomings in accuracy have been pointed out, for example, that it is not clearly possible to say what constitutes a sound and viable company. The audit has shown that companies that had both low profitability and low solvency before the pandemic were clearly overrepresented among those who received temporary deferrals, which is quite logical since these run the greatest risk of being affected by liquidity problems. But it can also be due to the fact that no credit assessment equivalent to that performed for bank loans was required to obtain a temporary deferral.
The National Audit Office has issued five recommendations on the grounds of the audit. The Government's assessment is that these are forward-looking should a serious situation arise again where temporary deferrals of tax payments will be considered as a crisis measure. Regarding two of the recommendations, however, the Government makes a different or partially different assessment.
One of the recommendations concerns limiting the possibility of being granted a deferral during periods when the credit market is not functioning normally. This is an assessment that the government does not share. It is considered that the measure is also needed when uncertainty regarding the companies' economic development complicates the assessment of credit risk and thus limits the access to capital for otherwise viable companies.
It could actually be added that it is precisely in such a situation that this type of measure is needed most. It is important that the government does not limit its room for maneuver in an eventual future crisis when powerful measures need to be implemented on short notice.
The National Audit Office recommends that the government limit the scope of the deferrals to a few accounting periods. The government's assessment is that a flexible approach is preferable, with the reservation that the type of support that the deferrals entail should only be used during periods of economic uncertainty.
During the pandemic, new assessments were continuously made regarding the reporting periods as new information about the development of the pandemic became available.
The Government agrees with the recommendation to consider clarifying the reasons when a deferral is not to be granted. It is very important to eliminate the risks of unserious companies abusing the system.
The Government also agrees with the recommendation to consider whether the deferral fee and cost interest should be charged progressively, which is in line with the purpose of fundamentally supporting sound and viable companies that should have the opportunity to manage this.
When it comes to improving the calculation of expected collection losses and the reporting of the risks with tax credits, the government agrees with the National Audit Office's recommendations.
Finally, Mr. Speaker, I would like to once again emphasize that a unanimous committee has nothing to object to regarding the government's assessment.
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.