Response to interpellation 2022/23:340 on the supplementary directives to the investigation on the equalization system
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
KD argues that the supplementary directives are necessary to counteract high tax rates, promote growth, and ensure efficient use of resources 1. KD wants to address the high-tax problem where the gap between low- and high-taxpayers is large 2 and argues that the investigation should focus on reducing the risk of negative side effects of the income equalization on growth 3. KD considers that 6 billion kronor is a small part of the big picture 4. S argues that the government is more worried about tax increases than about the threats to welfare 5 and criticizes the proposal for a tax cap 6. S believes that municipalities and regions must be able to raise taxes to secure welfare 7. S argues that the government wants to carry out a system shift to privatize welfare 8.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Statsrådet Erik Slottner (KD)
Mr. Speaker! Eva Lindh has asked me what reasons underlie the decision on a supplementary directive to the investigation on the equalization system, whether I intend to take the initiative to further clarify what should be investigated, and why I have not campaigned for an extension of the investigation period when it may already be short on time for the investigation to manage to review the entire equalization system.
The ongoing parliamentary Equalization Committee has been tasked with conducting a broad review of the municipal economic equalization system. The background for the committee's appointment was an announcement from the Riksdag to appoint an investigation to review the entire municipal economic equalization system with a focus on development, growth, and equal service throughout the country. According to the announcement, the review should also include an analysis of how the system affects the incentives of municipalities and regions to stimulate growth.
These parts are included in the original directives.
The Government has decided on supplementary directives which mean that the Equalization Committee shall also submit proposals on measures to counteract high and increasing tax rates. The assignments in the supplementary directives are in line with the original directives but mean that the issue of growth and the need for measures to promote efficient resource utilization in the municipal sector is highlighted.
The reasons for the decision on the supplementary directives are described in the directives. This concerns, among other things, that the conditions for the municipal sector's financing will be hindered as a result of demographic developments. This can lead to tax increases that risk having negative socio-economic consequences.
To secure prosperity in Sweden, we need to lay the foundation for strong economic growth. The general government grants and the equalization are important for the financing of the municipal sector and for individual municipalities and regions. It is of great importance that the equalization system functions as it should, for example that differences in socioeconomic factors are addressed through the system. But what is crucial for the municipalities' and regions' ability to deliver a good welfare in the future is that the development of the tax base is good and that the use of resources is efficient. Municipalities and regions need to continue to work innovatively, streamline their operations, and develop them according to new conditions.
According to the supplementary directives, the investigation period is fixed. The assignment must therefore be reported by no later than just under a year, on May 3, 2024. The Equalization Committee has a broad and important mandate. At the same time, several other important investigations are underway and being planned, and prioritizations are necessary.
Eva Lindh (S)
Mr. Speaker! Let me first just say something briefly about what the debate is actually about. It might sound a bit boring when one hears words like "supplementary directives" and "equalization systems." But this is about our welfare and how the resources for welfare should be distributed. Right now, we have an investigation that is to review whether we should distribute the resources to municipalities and regions in a different way than we do today.
In Sweden, we have local self-government. Municipalities and regions have great freedom to design and take responsibility for their operations. It is a good and well-functioning model that is the basis for the decentralized welfare that we have in Sweden. It is intended to level out what is called the uninfluenceable differences, i.e., those that municipalities and regions cannot influence themselves, and provide better conditions to level out the differences that actually exist. It is therefore a matter of creating equal conditions so that all of Sweden can live and grow. It is a question of justice.
In the autumn of 2020, the Riksdag decided to appoint an inquiry to review this entire system. The inquiry's work began in the autumn. Now we have received a new government that has come with additional directives, meaning they clarify what they specifically want the inquiry to focus on, and what the government sent actually concerns two things: to counter high and increasing tax rates in municipalities and regions and to reduce the risk of the so-called negative side effects of the income equalization on growth.
What does the government mean by this? What is meant when it concerns growth? What is the basis for the decision on a supplementary directive? What is it that the government sees and that they think was not seen previously?
The Government writes in its background to the decision on the supplementary directives that the so-called demographic development, that is, the age distribution of the population in Sweden, is changing. It is said that there will be more elderly people and fewer of working age who can work and pay tax.
They further state that it leads to an increased cost pressure on welfare services.
I agree; that is exactly how it is. We have also discussed that municipalities and regions have difficulty managing the economic difficulties and maintaining the welfare.
That is where the consensus ends, because what the government seems most worried about is that the municipalities will raise the tax. They do not seem so worried about the negative effects on welfare, even though welfare is threatened.
Therefore, I ask: What is the background for choosing to emphasize just these points and nothing else in the leveling system that we are now investigating?
Peder Björk (S)
Mr. Speaker! During the last few hours here in the chamber, we have debated resources for the welfare state, that is to say, for the school, preschool, elderly care, healthcare and much more.
During the previous debate, the Minister has been very clear that general state grants to municipalities and regions have only a marginal significance for the finances of municipalities and regions. I believe that few, if any, municipal politicians would agree with that.
However, the interest of the Council of State and the Government in the municipal equalization system seems to be all the greater since the Government is now, despite an investigation already having begun its work, adding supplementary directives based on the Government's prioritized issues.
A question that I believe many find particularly interesting in this is precisely the wording that one wants the investigation to now review how it can propose measures that counteract high or increasing tax rates.
I believe that all of Municipality- and Region-Sweden is already waiting for some kind of announcement from the government regarding what is actually meant by this supplementary directive. As we all know, the very possibility of collecting taxes in our municipalities and regions is a substantial part of municipal self-government—a municipal self-government that is furthermore established in the constitution.
Mr. Speaker! My question to the Minister is therefore: Is the underlying purpose of this supplementary directive that the government actually wants to review the possibility of introducing a tax ceiling for municipalities and regions?
Niklas Karlsson (S)
Mr. Speaker! For a while in the chamber of the Riksdag, we have debated a couple of issues concerning precisely the municipalities' resources and the municipalities' financing. Many of the answers that the Minister has returned to have been about the long-term measures, the importance of structural measures, and that we shall strengthen the robustness in Sweden's municipalities. In that respect, there are no differences whatsoever between the Social Democrats and what the Minister expresses. I believe even that we need to find common solutions and possess an ability to, across party boundaries, carry the important and sometimes tough decisions that are required to strengthen the municipal sector in the long run.
But the interpellation debates we have engaged in during the afternoon in the chamber of the Riksdag have been about the challenges that the municipal sector faces right now, that is, the most acute ones. The municipalities say that 24 billion are missing to maintain the commitments that exist today. We Social Democrats have said that we want to allocate an additional 6 billion in general state grants. It is a doubling compared to what the government wants to allocate, but not the whole. I believe that the minister should be careful and not dodge the question. We know what we are talking about. You want to allocate 6, and we want to allocate 12.
What is serious in this context is the Minister's attitude. It is said that 6 billion is a pittance, that it makes no difference. One can have that perception if one has been a municipal politician in the city of Stockholm. But go out to my municipality or other municipalities that are significantly smaller, where the challenges are so much greater, where every crown is turned over to be able to finance elderly care, childcare, and the school. There, 6 billion is not a pittance. Every penny, every cent, and every crown will make a difference in maintaining the welfare in the municipal sector. To furthermore claim that the municipalities still have access to 55 billion in the equalization reserve, so they will manage just fine, is not worthy. It is not what the municipal sector wants to hear.
We note that the government does not hear the municipalities' collective voice, and we note that the government does not see their collective needs. To furthermore proceed with a proposal where one wants to introduce a tax freeze, a cap on the municipalities' tax revenues, where those who hold the municipal self-government and are to finance their own welfare are not allowed to collect the revenue required to pay, because the government says no – yes, I do not know what that resembles.
Mr. Speaker! I have no question for the Minister, but I think the Minister should be given a chance to explain how the government actually intends to proceed. Now, the deficit is not monumental, but it is nevertheless extensive in Sweden's municipalities and regions, namely minus 24 billion. They receive no additional state grants because the state neither sees nor hears them. Furthermore, it is said that a ban may eventually be introduced against increasing tax revenues because the municipalities cannot make tax increases.
Is this the government's way of starving the welfare state, of privatizing it, of reducing common affairs and individualizing obligations? Are my children no longer our children? Do we no longer have a collective responsibility for our elderly? I want to hear the Minister explain that. What do you want with the municipal welfare? Is it to be comprehensive, or are we now moving towards a development where everyone must be the architect of their own fortune?
Statsrådet Erik Slottner (KD)
Mr. Speaker! I think one should still be careful with words. I must start where Niklas Karlsson finished.
If one says that we double the appropriations to a sector, then it means that the appropriations are doubled. There is a huge difference between doubling an appropriation or doubling an investment.
I have a salary of 35,000 kronor. One employer raises the salary by 2 percent and another by 4 percent, but that does not mean that the other employer has doubled the salary, but rather doubled the salary increase.
If the Social Democrats had doubled the allocations regarding the state grants, your budget would have contained an additional 150 billion kronor in general state grants. Instead, it contains an additional 6 billion, and that is a big difference. I think one should still be a bit cautious without trying to come across as a language moralist.
Peder Björk claimed that I had said that state grants have a marginal effect on the municipalities' finances. No, I have never said that. But I have said that the debate is about whether we should raise the general state grants from 146 to 152 billion or from 146 to 158 billion. It has a rather marginal effect compared to how inflation, interest rates, growth, and hours worked strike through in the municipal sector. We should put much more energy into debating how we get up the growth, how we get in tax revenues, how we get more people from exclusion into work. That would have the really big effect on the municipalities' finances. I am trying to broaden the debate, not marginalize and not diminish.
Now back to what the interpellation is actually about, namely the tax equalization system and the sitting committee.
A broad review shall be conducted of the entire municipal economic equalization system, where, among other things, growth is an important aspect, as well as whether the socioeconomic parameters strike out sufficiently well. It is a broad assignment, and I think that is good.
Now there is a new government where we want to establish our distinct character - something, at least. There are some municipalities that say they lose out on growth. If they increase in population and have to invest in a lot of new infrastructure, it becomes a loss. They lose out on building housing, and they lose out on an increased population. That is not really good. It is not good if there are municipalities that say they lose out on decreased unemployment and increased population. The intention is still that there should be drivers for growth.
We are a bourgeois government, and we think this is an important perspective in the equalization system. Therefore, we underline it extra carefully in the supplementary directives, fully aware that it was also included in the original directives - but we still want to emphasize this extra carefully.
In the Tidö Agreement, which the governing parties and the Sweden Democrats have concluded, it states that we shall review the so-called high-tax problem. The gap between those municipal residents who pay the lowest tax and those who pay the most is approximately 7 kronor per earned hundred kronor, even though welfare is rarely better in the high-tax municipalities. It is what we sometimes call the high-tax problem. How shall we address this? We would like to receive answers to questions on how we can avoid even larger tax gaps between those who pay the lowest tax and those who pay the highest tax, and how we can counteract the fact that the municipalities that today rank high on the tax scale should raise taxes further.
I do not intend to preempt the investigator's proposals. The investigator must come forward with their proposals. Then the government will analyze the proposals and look at how we should further prepare them. That is what the assignment entails.
Eva Lindh (S)
Mr. Speaker! I think it is unworthy to say what Civil Minister Slottner says. He means that 6 billion in increased resources to the welfare sector has a marginal effect. It is a bit mocking towards the municipalities that now must cut back, lay off staff, which have schools that are affected, where elderly care cannot provide the care that the elderly need. I am upset - because we should all safeguard the welfare that exists in Sweden, which is so important for all of us. To then say that 6 billion more, which we Social Democrats propose in our budget, would have a marginal effect is upsetting.
Then the Minister of State says that inflation plays a larger role. It is clear that it plays a role. It is precisely for that reason that the need to provide more resources to municipalities and regions becomes even more urgent. In addition to the fact that municipalities and regions receive insufficient resources in the current situation, increased interest rates, higher rents, and inflation that increase costs in welfare also mean that resources are needed even more. It is unworthy.
But now we shall move on to what we are going to debate regarding the supplementary directives that the government has submitted. I will begin with the question of being able to raise the tax.
Some municipalities have such difficult conditions for welfare that they have to raise taxes because we do not have equal conditions for municipalities and regions in this country, in Sweden. It is not an easy decision for any municipal or regional politician. But they can do it if they feel that they must and need to. That is exactly what local self-government is about. One is not only responsible for the forms and responsible for welfare, but one also has responsibility for the money coming in. If one does not manage the welfare, one has the possibility to raise the tax. That is also a self-government that is needed.
I have probably never done this before, but I am going to quote a person. It is the Prime Minister, the Moderate Party's party leader Ulf Kristersson, who in an interview said that "fundamentally it is about local self-government, where municipalities decide their municipal tax. So I believe fundamentally that is how it should be." For once, I agree with Ulf Kristersson.
The second question concerns growth inhibition. It is about how a part of the equalization system - possibly, according to a theory - could be thought to prevent municipalities that have much better conditions than other municipalities from doing what they can to increase growth in the municipalities. This is a theory. It has been looked at very many times, and no one has ever found anything that says it is that way. The National Audit Office has done it. Some others have done it. The investigation does it.
Still, the government goes ahead and says that this is something very important. But I do not see that it is about any money, for example, to the municipalities in northern Sweden that are growing right now and which have large costs for expansion. I do not think it is about those municipalities, but that is exactly what I would like an answer to. Which municipalities and what growth are we talking about, Minister?
Peder Björk (S)
Mr. Speaker! When the Minister begins to speak about there being municipalities that have high taxes, I think there is a reason why municipalities and regions have high taxes.
One reason is that one does not have the same structural conditions, as it is usually called. It simply looks different in our elongated country.
Another reason why municipalities have been forced to raise taxes is that both the current government and previous center-right governments reason exactly as the Minister does: 6 billion more or less to the municipal and regional sector has marginal significance. It doesn't matter.
If one also adds the tax cuts that have been implemented over the last 10-15 years on top of that, it is clear that it erodes the resources of the common welfare at the state level, which means that the state cannot provide these funds. Therefore, municipalities and regions are forced to raise taxes.
That is why it looks the way it does, and from that perspective, it is surprising that the government is now so interested in setting a tax cap. I cannot interpret it in any other way.
It was also in that context that the Minister, for the first time during this entire debate, referred to the Tidö Agreement and that it is included in such an agreement. One then becomes nothing less than a little curious as to which of the parties that agreed on the Tidö Agreement has driven precisely that issue.
I do not intend to demand an answer from the Minister to my question. But it still hangs there, and I believe that Kommunsverige with interest looks forward to what this investigation will conclude. It is obvious that a tax ceiling is the government's priority and that it is what one wants to see.
Niklas Karlsson (S)
Mr. Speaker! It is good and well that we try to broaden the debate and conduct long-term reasoning regarding the welfare state's long-term commitments and how we shall strengthen the municipality and regional sectors' robustness both financially and regarding personnel and competence supply. But today's debate is also about something much more pressing and much more acute. It is about what the municipal sector faces just today, and what the Minister avoids reasoning about.
The reasons for that, of course, can only be speculated about. But if it is indeed the case that the government has the ambition to tackle the high-tax issues in the municipal sector, where there is a difference of six or seven kronor between the municipality with the highest tax collection and the one with the lowest tax collection, then the measure cannot be to forbid municipalities from raising taxes if one is not simultaneously prepared to take responsibility from the state side.
What we are seeing now is that the government is holding back with one hand. Additional appropriations were not needed, because the municipalities do not benefit from that pittance anyway. They should manage anyway, because there is so little money. On the other hand, it is said that the municipalities should not have any opportunity to take their own responsibility. Their opportunity for their own tax collection is to be restricted.
In previous posts, I have been somewhat reflective and asked the Minister to lay out the text on how the government intends to proceed. Now I want to sharpen it and make a statement.
I assert that what we are seeing now is a systemic shift - a systemic shift where welfare is no longer to be collective, where we are to privatize, where we are to reduce common affairs and where welfare is to be individual commitments. Here lies the dividing line in Swedish politics between right and left and between social democracy and the bourgeois government.
Statsrådet Erik Slottner (KD)
Mr. Speaker! It was actually a staggering conclusion from Niklas Karlsson that I consider to be unprofessional.
These 6 billion SEK in general state grants that distinguish the government's budget from the Social Democrats' budget represent a few per mille compared to the whole of what the municipal sector receives in tax revenues and fees and targeted and general state grants. To claim that it is that which is the difference, that it is that which determines whether one wants a general welfare or not and whether one wants a developed welfare or not, is not serious. Not a single serious assessor can believe this. If SKR were here, they would laugh at such a claim. I believe every single economist would laugh at it.
It simply isn't true that those billions are the difference between whether we want a good and general welfare for everyone and whether we want a ruined welfare. It simply isn't true. 6 billion kronor is money, absolutely, but I am comparing it with the big picture. A tenth of a difference in the repo rate makes more than 6 billion kronor. A few tenths in inflation can make more than 6 billion kronor. The number of hours worked, I believe, would need to increase quite a little to compensate for these 6 billion.
I want us to put this into a slightly larger perspective so that we do not believe that the welfare depends on whether one gives 152 billion in general government grants or 158 billion. We must broaden and widen the debate from there.
Eva Lindh asked me which municipalities I am talking about when it comes to growth-promoting measures. I am talking about all municipalities. It is being insinuated here that I am only talking about large cities around Stockholm. That is absolutely not the case; I am talking about all municipalities, and I truly hope that the tax equalization committee has all municipalities in sight when it comes to growth-promoting measures and that we do not get a system that hinders growth.
It is further said that the government would advocate for a tax increase ban, but there are no such statements at all. In the Tidö Agreement, there is talk of a high-tax issue, and we must nevertheless realize that it exists, not least in many parts of the interior and northern Sweden. There, taxes are significantly higher than the average, but they still have difficulty delivering good welfare services. This is to be analyzed by the tax equalization committee, and then proposals shall be submitted on how to avoid the tax gap increasing even further in our elongated country. This does not mean that the government is locking itself into any specific model.
I have no idea which party negotiated that specific wording, as I was not involved in negotiating the Tidö Agreement. Unlike in some other negotiations, very little leaked from the Tidö negotiations, which I thought was good. It also means that even I, as a minister, know very little about the history behind every wording and sentence.
It is said that it is obvious that the government has a tax ceiling. No, it is not obvious. I do not know who it is obvious to - not for me in any case.
The investigation shall be non-presumptive. The Government sees that there is a problem with high taxes in several municipalities, and this shall be analyzed to see what can be done to avoid these municipalities needing to raise taxes further in the future.
Eva Lindh (S)
Madam Speaker! I ask the Minister to devote his last two minutes to clarifying what is meant by the additions and what the reason is for the additional directives, which target something but leave out what we consider important, namely development and equal welfare throughout Sweden, where is that?
The government is focusing on one of the three areas that the Riksdag jointly decided upon, which were growth, development and equal service. Now the government says that the question of growth is crucial.
The National Audit Office says something about growth that the government may not have spent much time on – but the Minister is welcome to correct me if I am wrong. The National Audit Office points out that there is an aspect regarding growth that has not been examined and therefore has not emerged. That is that a lower degree of equalization would mean increased income differences between municipalities and that such differences in themselves can be significant for growth. Large differences thus affect the growth opportunities.
The Social Democrats will continue to be the champions of welfare. We do not want to limit the opportunities for municipalities and regions to stand up for and take responsibility for a good welfare for all residents in all of Sweden. I will continue to fight for this, not only in the investigation but in my entire mandate as a politician, and I know that my Social Democratic colleagues will do the same. So we may see each other here again, Minister.
Statsrådet Erik Slottner (KD)
Madam Speaker! The promise to meet here again will certainly be fulfilled. I would gladly do so!
I think that during the debate, as in the directives, it has emerged why we are providing these additional directives. I do not know how I can clarify it any further. The Government believes that the growth perspective is important and therefore wants to clarify and strengthen it. It is not about generally strengthening growth a little, but the investigation shall submit proposals for measures to reduce the risk of negative side effects of the income equalization on growth. It is an important clarification that shows that the Government emphasizes the growth perspective.
The issue of high taxes is, as mentioned, included in the Tidö Agreement, and this is a way to handle that part of the agreement. It is important that we fulfill the promises we gave in the Tidö Agreement. It is about analyzing the causes of the differences in tax rates between municipalities and regions and then submitting proposals for measures to counteract high and increasing tax rates in municipalities and regions. It will be exciting to receive these proposals.
I hope that the committee will not be as locked in its thinking as the members in this debate seem to be. It would be a pity.
In conclusion, I thank the members for the debate and not least Eva Lindh for the interpellation. See you again in the chamber for new interpellation debates on new and old subjects!
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.