Response to interpellation 2022/23:91 on the threshold for state income tax
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
1 M considers that the increase of the threshold for state income tax is a standard and automatic measure in accordance with the legislation to take into account rising real wages 1. 2 M argues that it creates predictability and that it is important that diligence and hard work pay off 2 3. 2 M emphasizes that there is no tax cut in the government's budget 2. 4 S criticizes the government's priorities 4 5. 5 S argues that instead of giving tax cuts to high-income earners, one should invest in welfare 4 5. 5 S considers it unreasonable to give large tax cuts to those who already have a lot 5 6. 7 M considers it crucial to fight inflation 7. 7 M argues that one should lower the tax for the broad group of wage earners, including those with low and medium incomes, as well as lower the reduction obligation 7. 7 M claims that the Social Democrats want to raise the tax for 1 million wage earners 7. 8 S argues that the government spends 13 billion on the increased threshold instead of providing resources to 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.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! Sofie Eriksson has asked me why the government has decided to raise the threshold for state income tax and whether I consider the increase to be compatible with restraint in the budget. She has also asked against what background the government decided that persons with incomes over 70,000 kronor per month should be prioritized for a tax reduction of approximately 1,400 kronor per month.
From Chapter 65, Section 5 of the Income Tax Act, it appears that the threshold for state income tax increases by 2 percentage points beyond inflation every year. It is a standard increase to take into account rising real wages. The government has therefore not presented any proposal for an increased threshold in 2023 but has established the threshold in accordance with the provisions in the law. That the breakpoint is raised automatically is a good arrangement, otherwise more and more people would pay state income tax every year. Inflation also causes the basic deduction and the job tax deduction to be raised automatically.
Approximately 1 million Swedes pay state income tax. This concerns almost three out of ten police officers and every fourth midwife. Limiting the upward adjustment of the threshold for state income tax would therefore mean increased tax for a large group of Swedes in a tight financial situation, which I do not consider justifiable.
Sofie Eriksson (S)
Mr. Speaker! Thank you for your answer, Minister for Finance!
I have, therefore, asked a bit about this matter of the government having raised the threshold for state income tax, at a cost of nearly 13 billion kronor. The Finance Minister described the budget as somewhat restrained, yet one still had the means to spend nearly 13 billion kronor on lowering taxes for high-income earners. At the same time, there are warnings of enormous cuts in schools, healthcare, and elderly care.
People have talked about doing this to protect people from inflation. Apparently, it is obvious that those who pay state income tax, i.e., people with higher incomes, should be protected. It is so obvious that it is described as an almost automatic measure.
It is not automatic, however, Mr. Speaker. In 2013, the then right-wing government proposed that the threshold should be raised even more than the usual adjustment. In 2016 and 2017, the then S-led government did the opposite and limited the adjustments. What would we have a government and a finance minister for, by the way, if everything were just automatic?
One also has to ask which parts are not inflation-protected. Yes, it is the welfare. It is the unemployment insurance and the child allowance. If one really cares that much about midwives, one should invest in the welfare. Why should one lower the tax for groups who earn between 70,000 and 130,000 kronor a month? How many of the hard-working police officers who are out there in the bushes recognize themselves in the fact that they would earn over 50,000 kronor a month?
The Minister for Finance mentions in her answer that the earned income tax credit and the basic deduction are also increased. One can sense that she means that groups with slightly lower incomes also receive a kind of protection in this situation. In that case, one should keep in mind that a childcare worker in childcare thus receives a full 36 kronor more in earned income tax credit - while the person who earns 70,000 kronor a month instead gets 1,000 spänn more per month due to the increase in the tax bracket limit, and an additional 400-500 spänn with the earned income tax credit and basic deduction.
I would very much like to have an answer to my question. What has been behind the government's prioritization? Why is 13 billion kronor being spent on high-income earners instead of investing more in welfare?
Ida Drougge (M)
Mr. Speaker! Given the high tone here in the debate, one could easily believe that the interpellator and her party have championed this issue for a long time. One could believe that during their previous eight years in power, they have fought to change today's regulatory framework and perhaps to some extent have already done so, but that is simply not the case.
One can also consider what would happen if we did not have this legislation - if it were not the case that we had a regulatory framework in the Income Tax Act for automatic increases of the threshold. One can consider what would happen if we did not have similar rules in a number of other areas, for example for CSN. In the same way as those who pay state income tax receive an adjustment of the threshold, the country's students receive an adjustment of CSN.
In plain language, there is probably no better way to explain this than with the choice of words that it happens automatically. It requires an active action to change these laws. A change of the law does not happen automatically. I therefore have a question for the interpellor. Does she believe that this regulatory framework should be removed permanently? Should, for example, the increase of CSN not happen automatically? Should the limit for the state income tax also continue to be adjusted?
Mr. Speaker! I would like to see the Minister for Finance elaborate a bit on what would happen if we did not have this type of regulatory framework. How many Swedes would then need to pay state income tax in a few years, for example?
Niklas Karlsson (S)
Mr. Speaker! I have had this discussion with the Minister for Finance in the chamber of the Riksdag before. We now see a bourgeois government that is prepared to inflation-protect the incomes for those who earn the most but does not care about the people who, at best, receive a wage increase of 4 percent. This is what it is about, nothing else.
It is not about regulatory frameworks or legislation or about breaking automatics. In some way, people try to overlook that fiscal policy can actually be discretionary - and in many cases, it is. Through such a procedure, we are talking about what we think and what we want, through active decisions.
What is happening now is that we are living under circumstances where inflation is peaking at 10-11 percent. Interest rates are rising, and people have to start pinching every penny just to be able to pay their housing costs. We see skyrocketing prices within the electricity and energy sector. That is what makes it necessary to also ensure that a fair policy is pursued, where it is not only those with high incomes who receive large tax cuts. One cannot pursue a policy for those who already have while not caring about those who are ordinary wage earners, that is to say, the broad groups of wage earners.
A question was asked by one of the members of the Riksdag here in the debate. They are trying to make a thing out of the fact that we Social Democrats have not stopped the automation earlier. The answer to that question is that it is not a principled stance for us, but that we are prepared to reconsider this based on the circumstances. What is stated in the Income Tax Act is reasonable, but when it has these effects, the politics must step forward. Then one must dare to make decisions and choose a path. Whose side do you stand on - is it on the side of high-income earners or the broad groups of wage earners?
It is this that has made the Social Democrats say that it is unreasonable that those with high incomes receive an increase of the threshold by 4,000 kronor per month. The Social Democrats are prepared to make active decisions and not just refer to circumstances such as that the legislation looks the way it does and that there is an inherent automaticity. It is, after all, we elected representatives sitting in this chamber who enact the laws. If the law is not good - if the law is wrong - the Social Democrats are prepared to change it, and that power we elected representatives have. That is the tool the Social Democrats want to use.
We Social Democrats, in fact, show that we stand on the side of broad wage groups. We believe that burdens should be borne according to ability and distribution should occur according to need. In that case, it is actually unreasonable that we give the large tax cuts to members of parliament, ministers, or others who earn significantly more than 50,000 kronor a month.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! We can quite simply compare two different budget options. One is the government's budget, which the Sweden Democrats also stand behind. In many cases, the Social Democrats also stand behind it in various parts, but not in just this. We can look at the tables and see our active initiatives. There is no tax cut, which the Speaker and the interpellator know very well.
When one reads the Social Democrats' budget motion, it becomes clear for all of Sweden's wage earners - and especially for the million wage earners who have paid state tax - that there are tax increases for them during 2023. That is the difference here, and it is an important message for the groups I mentioned that the Social Democrats are raising the tax by approximately 1,000 kronor per month. This therefore applies to 1 million people.
With the Social Democrats' budget, if one were not to make any adjustment, it is furthermore the case that 375,000 more people would pay state income tax during 2023 compared to how it will be with the ordinary adjustment that is now taking place. This is therefore the answer to the question that was asked here earlier. This is also important, because it follows throughout life. It follows during the years ahead. It is an important message to receive.
Obviously, we have different views on what the Social Democrats introduced in the 1991 tax reform, namely precisely this type of automatic adjustments for different parts.
The guarantee pension is increased by 850 kronor this month due to inflation and adjustment. Student grants and other parts are also increased. The allowance is not indexed, but we have kept it at a higher level; it is permanent and will not return to lower levels.
There is a sense of fairness and an important predictability in these systems. But it is important for 1 million wage earners to know that the Social Democrats are prepared to change what they have done for very many years to ensure that 375,000 more have to pay state income tax and that more receive a tax increase. It is a prioritization, as Niklas Karlsson says.
I believe that predictability and foreseeability are important. If one were to continue doing it in this way, it would mean that more and more people would have to pay state income tax. Perhaps this is also what the Social Democrats want.
Sofie Eriksson (S)
Mr. Speaker! Thank you, Minister for Finance, for the answer!
The Minister for Finance speaks of fairness when one is to lower the tax for people who sit here and earn over 70,000 kronor a month, for members of the Swedish government, who well earn double that, or for CEOs of listed companies, who earn triple that. Is that fairness?
I know that one is not allowed to swear from this rostrum, so I will not do that. But I will tell you about my mother Monica. She has worked her entire professional life as an assistant nurse. She describes her 45 years in Swedish elderly care like this: "It is as if respect has been lost, as if we are worth less as human beings. One can always squeeze out a little more, let us run a little faster and save a little more money."
I know that this debate is about the threshold for state income tax, and I know that these 13 billion kronor do not solve all the problems in the welfare system. I know that. But there is something mocking about not even thinking that they are needed there. We are in a situation where there is talk of layoffs in the welfare system, where there is already an understaffing. Now, layoffs are to be announced, and it is because the money is not enough.
How can one then land on the conclusion that it is reasonable to spend all these billions so that, for example, members of parliament, ministers and CEOs of listed companies should receive this money? If one now cares about midwives and police officers, one should probably spend the money on them.
How can one land on the conclusion that this is a reasonable order?
Ida Drougge (M)
Mr. Speaker! I look forward to the day when Social Democrats also propose lower taxes for low- and middle-income earners - for broad groups in society who would truly need it.
I agree that very many in Sweden work, toil, go to work, stress, and wear themselves out. It is not just about it being tough times, but one becomes exhausted over time and does far more for this country than many others do. All people who do that deserve respect and deserve to keep more of their money in their wallet.
For all people who work, it needs to pay to go to work. It is respect. But it also means that it needs to be profitable throughout the entire work chain - for everyone who works. For the person who is a nursing assistant and further educates themselves to become a nurse or a specialist nurse, the educational efforts need to pay off. That is why we have the increase in state income tax. That is why it is flat-rate.
So, yes, it is also absolutely about principles and about us wanting a tax system where diligence, toil, and hard work pay off. It does.
Niklas Karlsson (S)
Mr. Speaker! I must admit that this is an issue that easily lets emotions affect me. The agitation rises, and it becomes somewhat provoking. I hear bourgeois representatives in the Swedish Riksdag who, completely out of touch with reality, do not see people's everyday lives, with high inflation, rising interest rates, and high electricity and energy prices, where one has to pinch every penny. They try to wave this away by saying that an automatic increase of the threshold occurs for those who earn the best.
Furthermore, they are trying to throw some kind of yeast into this dough by talking about lowered taxes for broad wage groups. I think the tax settlement that was made in the 90s, where one of the starting points was broad tax bases and lower taxes without changing the tax ratio, is perfectly reasonable. I have no concerns with this. But what we are talking about today is a raised threshold - it is to give even a little more to those who already have.
Let there be no doubt about where the line of conflict lies in this chamber - in Sweden's Riksdag - between right and left. It is about principles. It is about views on society. It is about justice. Let there therefore be no doubt: There are parties and representatives in Sweden's Riksdag who stand on the side of broad groups of wage earners, and there are those who think it is more important to give more to those who already have.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! Something that I am currently truly engaged in and passionate about, and which the budget that we placed on the Riksdag's table last autumn and which is decided, is aimed at, is not to fuel inflation. It is inflation that is something harmful for ordinary wage earners. There is nothing worse than inflation - what one earns becomes worth less, and what one has saved up becomes worth much less. Therefore, it is incredibly important for the government and for me that inflation comes down.
Another thing that is very important to me is that those who work as nursing assistants can keep more in their pockets. That is why we lowered the tax for that broad group of wage earners last year. I don't quite think that those from this group who are listening to this recognize that it is the Social Democrats who are standing up for the broad group of wage earners. We have received a lot of criticism for having lowered taxes for those who have low and medium incomes.
I sat here and thought and heard the high tone. I wonder if Niklas Karlsson, who is chairman of the Committee on Taxation, was just as upset when the Social Democrats themselves removed the education tax. I believe this was good, but I heard very few angry Social Democrats in here. It was an active decision. I believe it was important, because it should pay off to get an education in Sweden.
It is a high tone - perhaps not just because one cares about ordinary people, for one very rarely lowers taxes for ordinary people when one is a Social Democrat. This is a conflict that one wants.
I have great respect for the fact that people can have very different opinions on this issue, but for me, predictability is important. When I speak about reasonableness, the reasonableness is that there is predictability in the system.
There is a thought from 1991 – most of those in here were probably not here then, but it was still a system that was processed. There, we say that we shall ensure that different compensation systems are adjusted with different types of inflation. It is also about the threshold.
One can have different opinions on this, and obviously the Social Democrats think something else in this specific budget and want to raise taxes for 1 million wage earners.
It is not true, as many Social Democratic members often point out, that we would have no sense of reality. Most of us, including myself, live close to people with a guaranteed pension or an assistant nurse's wage. When I see their struggle and how they are doing, the fight against inflation becomes important for me, but also that we can lower the reduction obligation so that they can afford to get to their jobs if they need to take the car there. A bus driver or an assistant nurse who needs to get to work at times when there is no public transport is completely dependent on a car. The Social Democrats' message to them is not quite what we hear in the chamber, but that it is going to become even more expensive for them.
The tone is high. One can have different opinions. I will always stand on the side of the wage earners. For me, it is important to fight inflation, for it is the wage earners' worst enemy. I also think it is important to have predictability in the systems.
In conclusion and once again: In our budget, there is no decision and no table showing that we are lowering the tax. On the other hand, with the Social Democrats, there is a clear table showing that they are raising the tax for 1 million wage earners.
Sofie Eriksson (S)
Mr. Speaker! I thank the Minister for Finance for the answer.
I can answer quite quickly on this regarding the wealth tax. I was not in the chamber then, and I was really furious about it. It was not directly the Sveriges socialdemokratiska arbetareparti that submitted this demand, but it was other parties who thought it was an important priority.
It should pay to go to work, say the Moderaterna. My mother has worked for 45 years as a nursing assistant. What has she received for that? Quite poor pay, sick leave, a low pension, and worn-out joints and shoulders. That it should pay for those who struggle and toil, that doesn't really look like the case. She is not exactly rewarded when you lower the tax for those who earn absolutely the most.
Mr. Speaker! In times of crisis, it becomes most important to prioritize. Where should the money be spent? Who should bear the burdens, and who should take responsibility?
Today we have debated the threshold for state income tax. At the same time as there is talk of warnings in the welfare sector, where there is already understaffing, the government is allocating 13 billion kronor to a higher threshold. It could have been done in another way, but now these funds go to those who earn over 50,000 kronor a month.
One can explain this away in many different ways, but the fact remains: We can expect cuts in the workplaces of nurses, assistant nurses, and childcare workers. How long will the welfare staff be able to endure working under these conditions?
But we know; the Moderates are a party for those who are already wealthy, those who have their feet on dry land. They prioritize tax cuts for those with higher incomes over ensuring that the welfare system receives sufficient resources. This affects real people.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! I thank you for the debate, an important debate to both have and to maintain.
As I said when I presented the budget bill in the Riksdag, the budget provides room for maneuver if the situation worsens because these are uncertain times. We are strengthening welfare with approximately 12 billion extra this year, and in a deeper crisis, I am prepared to do more in various areas. It is an important issue for me.
I thank you, as I said, for the debate and the discussion. I believe that predictability is good and that we have the system we have, but I have great respect for the fact that we think a bit differently on this.
I will continue to work for the broad wage-earning group. It is important. In the Tidö Agreement, we have proposals to lower the tax for those with low incomes and middle incomes. It makes a difference for everyone who works, regardless of what salary one has.
I know that many people are struggling within different sectors and are doing a fantastic job every day. We shall make it easier for them and do everything we can to make it even better.
The interpellation concerns the threshold, and as I have said several times, it is reasonable to do it this way. The guaranteed pension increases, the student support increases quite significantly, and the thresholds change. That is how it is. It is adjusted according to inflation and will continue to be so.
It remains to be seen whether the Social Democrats and the Committee on Taxation will change this basic principle in other areas in the future.
I thank again for the debate and wish the interpellator and everyone else a pleasant weekend.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.