Response to interpellation 2022/23:408 on the use of funds from the municipal 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 municipal equalization system should create equal economic conditions 1 and compensate for structural differences such as population age and sparseness to prevent gaps 2. KD emphasizes that the general state grants are free to use based on the municipalities' own priorities 1 and that it is up to local politicians to decide how the money is used 2. KD argues that the state should not punish municipalities through the system as it would be a violation of municipal self-government 3. SD argues that the system is poorly designed as it enables waste in large cities 4 5 and creates unfair gaps between city and countryside 5 6. SD argues that the equalization support is used for activities that are not core municipal activities 4 5.
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)
Madam Speaker! Nima Gholam Ali Pour has asked me what measures I intend to take so that the municipalities that receive state grants through the municipal equalization system do not use these funds in a way that undermines confidence in the municipal equalization system.
The municipal financial equalization system aims to create equal economic conditions for municipalities and regions to offer their residents municipal services despite differences in tax capacity and structural factors. The system distributes a lot of money, and in order for trust in the system to be maintained, it is important that it is perceived as fair and correct.
The general state grants to the municipalities are distributed through the municipal economic equalization system. The system also involves a redistribution of tax funds between the municipalities. The municipalities that receive the largest grants in the system are those that have the lowest tax capacity, that is, the lowest tax base per inhabitant, and those that are expected to have higher costs for their operations due to structural factors, such as a high proportion of elderly people or sparse settlement structure. This means that the size of the general state grants, that is, the outcome in the equalization system, varies between the municipalities. For some municipalities, the grants are a large proportion of the total revenues, while about ten municipalities with high tax capacity pay into the system.
Municipalities and regions are responsible for their operations and finances, and they have a large scope for action within the framework of this responsibility. The general government grants are, in the same way as the municipal tax revenues, free to be used based on the municipalities' own priorities and needs. The municipal right of taxation is an important part of municipal self-government.
An important principle in the equalization system is that it should be based on non-influenceable factors so that an individual municipality's actual costs do not affect its outcome in the system. This means that if a municipality has higher costs, given its structural conditions, than the average municipality, that municipality must not receive more money in the equalization system. It is therefore not the case that other municipalities have to pay if an individual municipality chooses to invest a lot of money in a specific activity. Likewise, a municipality that is more efficient than the average municipality is entitled to keep the money that remains.
A parliamentary committee has been tasked with reviewing the equalization system in order to ensure that it fulfills its purpose. The committee shall also analyze the system's effects on development and growth. In supplementary directives to the committee, decided by the government this spring, it is stated that additional measures aimed at municipalities and regions may be needed to promote efficient resource utilization and that the committee shall propose measures to counteract increasing tax rates in municipalities and regions.
Nima Gholam Ali Pour (SD)
Madam Speaker! Sweden is an elongated country where different municipalities have varying conditions. Therefore, a municipal equalization system was needed that can level out the variations regarding population, tax capacity, and other economic conditions.
My interpellation does not question that a municipal equalization grant should be paid out to municipalities and regions. The problem is that the municipality that receives the most funds through the municipal equalization system is also known for wasting tax money.
Malmö city is to receive 6.3 billion kronor through the municipal equalization system during 2023. Malmö city has for a long time been the municipality that has received the most funds through the municipal equalization system. At the same time, the municipality finances Arabic film festivals and provides various forms of support to illegal migrants.
This year, Malmö city will for the first time allocate more than 1 million kronor for the organization of Malmö's Arabic Film Festival. It is an annual festival that the municipality finances. In my opinion, an Arabic film festival is not part of the municipality's core activities. I believe that quite a few agree. Obviously, Malmö city has too much money if one can waste tax money in this way.
Then we have the Zlatan statue. So far, it has cost Malmö city more than half a million kronor. The statue must be hidden, guarded, and repaired all the time. There is a long history behind why Malmö city stores and pays for a statue that quite a few Malmö residents want to sabotage. It is one of many stories that end with Malmö city's politicians wasting other people's money.
Malmö city has even started arranging the celebration of Muslim holidays. That is what tax money is going towards now. Is it municipal core activity?
Malmö city's waste is notorious and erodes trust in the entire municipal equalization system. Because there is one or another who asks the same question as I do: If others must pay 6.3 billion kronor to Malmö city for the municipality's finances to balance, how is it that Malmö city's politicians waste so much?
Is it the case that the municipal equalization system is designed in a flawed way? Instead of being able to maintain schools and other municipal core activities in smaller municipalities, the city of Malmö can pay its army of communicators and allocate 850,000 kronor to set up a unicorn in the public space.
That is exactly why I am asking the Minister if he intends to take any measures so that the municipalities that receive funds through the municipal equalization system do not use these funds in a way that undermines confidence in this system. This is precisely what Malmö city, the largest recipient of municipal equalization grants, has done.
It is important that the government takes action on this issue, because there is a discussion where the entire municipal equalization system is being questioned. Therefore, measures are needed to restore confidence in the municipal equalization system, which has been destroyed by the waste that some municipal politicians have engaged in.
Madam Speaker! In the response I received from the Minister, I heard no acknowledgment of the waste that some municipalities engage in. But today we see a municipal equalization system that is constructed in such a way that it upholds this waste.
Statsrådet Erik Slottner (KD)
Madam Speaker! The Equalization Committee's report will be submitted later this autumn. They must be allowed to work in peace without me making public statements about exactly how I think they should present their proposal for a new design of the tax equalization system. I will therefore wait a bit with overly certain statements and will receive their reports and read them with great interest.
First, I want to make a correction. Malmö is not the municipality that receives the most grants from the municipal economic tax equalization system. We calculate per inhabitant. We must do that. Otherwise, it becomes completely unreasonable. The municipalities that receive the most in this system are Bjurholm, Sorsele, Pajala, Dorotea and Åsele. All five are small municipalities located in the northern parts of Sweden. So we have had that said. Malmö municipality is in 127th place among receiving municipalities in Sweden. That might be good to know.
When I was a municipal politician in the city we are in now, Stockholm, I spoke very much about municipal core activities and how we would stop municipal waste. As a municipal politician, I took very seriously how we in the Stockholm municipality could focus more on and prioritize the core activities in order to, if possible, also be able to lower the tax.
There is no objective measure or concept for what constitutes core activities. What one considers to be municipal core activities varies slightly between different politicians and surely between different voters and citizens. Some think that the core activity is only the legally mandated activity. If one makes a very strict interpretation, we would scale back a very large amount of the municipal activity. Some make a slightly broader interpretation, while others make a significantly broader interpretation.
Where would the boundaries be drawn from the state? Should we say that if municipality x invests in y, z, å, ä, and ö, we should withdraw grants from the tax equalization system, but if one invests in this and that activity, it is okay to receive grants? It would lead to enormous boundary-drawing problems and, I would like to assert, be a major violation of local self-government.
I mean that it must be the voters who decide which politicians should govern in, for example, Malmö municipality. It cannot be I as Civil Minister who should punish municipalities through the municipal economic system. That is how I see it, based on how it would work in practice.
It is important that municipalities have a grip on their finances and do not drift too far out, but instead ensure that they prioritize the core activities. I must admit that I think we can sometimes see examples of somewhat incomprehensible priorities here and there in Sweden. But I believe that the tax equalization system would become a very blunt instrument to use here.
The interpellor himself says that Malmö received 6.3 billion kronor last year and spent 1 million on an Arabic film festival. Everyone understands that it is not the 6.3 billion that finances this film festival, but it is probably other money. Still, we are talking about incredibly different sums of money. One might think it is wrong to spend money on this in any case. But do not come and say that it is the municipal tax equalization system that finances this film festival. It is actually a bit of an exaggeration.
Nima Gholam Ali Pour (SD)
Madam Speaker! People in some parts of Sweden where there is hardly any municipal service wonder what the politicians are doing and how some large cities can waste as they do while other municipalities hardly have any municipal service. Where is the money coming from?
The money comes from the municipal equalization system. Without these state grants, municipalities such as Malmö stad would not be able to indulge in the kind of waste we see today. Without the municipal equalization system, where there are no conditions as it is designed today, Malmö stad would not be able to provide tax funds to the study association Ibn Rushd, which according to several reports has ideological links to the Muslim Brotherhood.
It is a major problem when Malmö city, which is the municipality that receives the most funds through the municipal equalization system, not per capita but most funds, is also the municipality that is most known for its waste.
I do not want to be sarcastic and say that Malmö city is missing 6.3 billion kronor in its municipal budget. But that is exactly how it is. Without the municipal equalization support, Malmö city would be missing approximately a quarter of its budget. Then it would be impossible for the municipality to indulge in the waste we see today.
That is where the problem lies. The municipal equalization system, whose purpose was to strengthen smaller municipalities that lacked municipal services, has instead become a tool to enable waste for large cities like Malmö. It is obvious that this has eroded confidence in the municipal equalization system and resulted in larger municipalities becoming a playground where taxpayers have to finance toys such as unicorns and Zlatan statues.
Such an arrangement also creates a greater divide between city and countryside. There are municipalities in the countryside where municipal services are inaccessible and where, if one does not live in the center, one only has the local community center (hembygdsgården), which is managed and financed by civil society and not through tax funds. But in larger cities, there are tax-financed youth centers for adults, such as the six all-activity houses in Malmö which happen to be located in Malmö's areas with high immigrant populations.
There is an injustice in this, especially when the larger cities do not finance this activity with their own money but through a municipal equalization system that does not equalize but instead gives larger cities the opportunity to waste tax money.
I believe that these problems with the municipal equalization system must be addressed. It is not possible to have confidence in a system that, in practice, enables waste. This is a waste that politicians on the left wing often take advantage of to favor their own rule, which is highly inappropriate.
Madam Speaker! It is a general perception that what municipalities such as Malmö engage in is a waste. Certainly, one can make the assessment that a municipality may allocate funds to an Arabic film festival or to Ibn Rushd. But I believe that most can determine what municipal core activities are.
Municipal core activities are primarily those that are mandated by law. But it is also school, healthcare, elderly care, and safety. That is what we expect to receive from the municipality. It is not all municipalities that can deliver this, while Malmö stad delivers this and also wastes money on other things, because they receive far too many funds from the state through the municipal equalization system.
Statsrådet Erik Slottner (KD)
Madam Speaker! What was said at the end means, therefore, that all municipalities that receive money in the equalization system can only spend tax money on healthcare, school, elderly care, and social services. It means that if the municipality spends a single krona on something that is not statutory activity, such as culture, leisure, sports, environmental activities, or traffic activities, the money from the tax equalization system disappears. Is that what the Sweden Democrats are proposing?
I am also concerned that the municipal waste shall cease. We know that it occurs here and there. But what is this system to look like? It will be very interesting to see what the Sverigedemokraternas representative in the Equalization Committee, which is a parliamentary committee, will propose.
How would this work in practice? Should I, as a civil servant at the Ministry of Finance, have a list of which measures net recipients in the municipal equalization system are not allowed to invest money in, so that we choke off those funds? I do not understand how that would work. There is no objective concept for what constitutes municipal waste.
We have municipal self-government. We must also safeguard it. It is constitutionally protected.
Last but not least, it must be the voters who vote in their local politicians. If the voters in, for example, Malmö are upset that very much money is given to things that one should not spend money on in Malmö municipality, then the voters must vote out those who rule there and vote in new representatives to change the policy in that direction. That is how a democracy works.
It must be the voters who ultimately decide what actually constitutes municipal waste. I believe it would be very difficult to find any other system.
We must also once again state that the municipal equalization system absolutely has its shortcomings. That is why we are reviewing it. The Government has given new directives to the Equalization Committee.
The point of the equalization system is to compensate for structural differences between the municipalities. If one has a high proportion of elderly in its population, it is assumed that one has higher costs for elderly care. If one has a higher proportion of children and young people than the average in the population, it can be assumed that one has higher costs for preschool and school. If one has great sparseness in its municipality, it can be assumed that one has higher costs. It is more difficult to conduct an efficient municipal operation then. Therefore, one is compensated for that. If one has very many inhabitants with a weak tax base, one is also compensated for that so that it does not create too large gaps and strains in our elongated country.
No municipality, nor Malmö, is encouraged or compensated through the municipal equalization system for spending money on x, y, or z. Without the grants from the municipal equalization system, it is based on the population structure in the individual municipality. It is then up to the municipal politicians, who are elected by the voters in democratic elections, to decide what they should spend the money on. It could be to spend more on the statutory activities, which can be called core activities, or one can choose to also spend money on other things.
So it must work that way. I find it difficult to see otherwise, even though I too, as a civil minister, from time to time can actually have views on one expense or another that is placed in one municipality or another. But the municipal economic tax equalization system must have the same structure moving forward as it does today, I believe, even if we can polish it a bit here and there.
Nima Gholam Ali Pour (SD)
Madam Speaker! The municipal equalization system is, as it is constructed today, a guarantee of the unjust gap we see between city and countryside. People can see it with their own eyes when they compare the waste in certain large cities, such as Malmö, with the lack of municipal service that exists in the countryside.
I have been to the countryside and seen struggling parents who have organized themselves to ensure that the village's last school does not close. Fighting for the village's last school or preschool is a recurring theme in today's Sweden.
At the same time, I live in the city of Malmö, where only the municipal support for cultural life amounts to more than 80 million kronor, of which none is statutory. It is about politicians who have so much tax revenue at their disposal that they can grant more than 80 million kronor to study associations and cultural associations outside the municipality's operations. But it is the municipal equalization system that enables the waste in the large cities. I believe that the school in the countryside is more important than Malmö's Arabic film festival.
Madam Speaker! What I hope the Minister takes away today is that we must have a municipal equalization system that ensures the school in the countryside can continue its operations while Malmö city does not have so many tax funds that they finance Arabic film festivals. It is about restoring confidence in the municipal equalization system and making it a tool that strengthens the whole of Sweden.
We cannot continue with the way in which the municipal equalization system enables a waste that is tragic. It is tragic because it is our tax funds that are being wasted. The waste must cease, and therefore the municipal equalization system must be changed.
Statsrådet Erik Slottner (KD)
Madam Speaker! The municipal tax equalization system will, with very high probability, be changed in some way because the investigation is currently reviewing the whole and all parameters. Some form of change will therefore occur.
However, I do not perceive that there is support in the Riksdag for us to review the principles themselves, that is to say, to compensate for structural changes that exist in the municipalities, such as population density, population age, the proportion in need of LSS interventions, etcetera. It is such things that we equalize through this system so that it shall be possible to live and work in the whole country.
Of course, one has a greater economic leeway in a larger municipality. 1 million does not mean as much in Stockholm, Malmö, and Göteborg as it does in Sorsele municipality. In Sorsele, 1 million is a huge amount of money and can even tip the entire economy from one year to the next. That is not the case in, for example, the three largest municipalities. It is a reality we have to live with. It looks different.
I still do not understand how, in practice – that is what I am getting at – it would work to create a tax equalization system that compensates for structural differences in the country in order to withdraw money from certain municipalities because they are investing in the wrong things. Who decides what are the wrong things? Who in this chamber shall decide what is not municipal core activity?
I may have a lot of my own opinions on this. Sweden Democrat MPs can have their own opinions. But how is this list to be drawn up, and what should it look like? I do not understand that. Before the debate I did not understand it, and I do not understand it now either after the debate. Perhaps it will become a bit clearer further ahead when the Equalization Committee submits its final report.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.