Response to interpellation 2023/24:25 on the effects of the employment tax credit for vulnerable groups
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
M argues that a restrained budget is necessary to combat inflation 1. M considers that an enhanced job tax credit is a structurally correct measure that strengthens the work line 1 2 and that broad tax cuts for those who work increase employment and generate resources for welfare 2. M emphasizes that they support households through housing allowances, reduced fuel taxes, and indexing of sickness and activity benefits 1 3. S argues that the sickness and activity benefits are too low 4. S considers that the government disadvantages economically vulnerable groups by only lowering taxes for high-income earners 4 5. S wants to remove the funkis tax 4 6. S argues that the job tax credit erodes welfare 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.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Åsa Eriksson has asked me how I intend to act so that the job tax credit in next year's budget does not disadvantage economically vulnerable groups, such as those on sick leave and the unemployed.
Sweden is in a serious economic situation. Inflation is at its highest level in over 30 years and is putting pressure on households. The most important thing we can do for households is therefore to ensure that inflation is fought. For that to succeed, a restrained budget is required where expenditures are weighed against each other and where we do not throw gasoline on the inflation fire. It is precisely such a budget that the government laid on the table of the Riksdag on September 20.
At the same time, we need to support households through the crisis. Many who receive benefits and transfers have received full or partial compensation for the high inflation, while wage earners have received a sharp real wage reduction. For example, the sickness and activity allowance is adjusted upwards with inflation. Therefore, we are now ensuring that taxes are lowered broadly through an enhanced job tax credit. It is also a structurally correct measure – in order for more people to be able to leave benefit dependency and support themselves, better incentives are required. It must always pay to work. In the budget, we therefore focus our tax cuts on those who work and those who have worked.
But we also support households where one or more people do not work. We extend the enhanced housing allowance, which means that families can receive up to 2,100 kronor more per month in extra allowance. We lower the fuel taxes by over 5 billion kronor. And the most important thing - I cannot emphasize it enough - is that we continue to fight inflation.
Åsa Eriksson (S)
Madam Speaker! How pleasant to be here today! It is not entirely easy to get the Minister for Finance to the chamber for an interpellation debate, so I am truly glad that she has taken the time.
Madam Speaker! I want to begin with a quote: "We will tighten the grants. It is not a threat, it is a promise." So said Prime Minister Ulf Kristersson at a press conference on September 4, when he and the Minister for Finance presented the plans for a new job tax credit.
The Minister for Finance is completely right - inflation has made food record-expensive. The queues at the aid organizations are getting longer every week with people seeking help. The cases at the Enforcement Authority are increasing, and more and more people are now turning over every single krona to make the finances work out. But something can be done about it.
The primary reason for poverty among the long-term ill and people with disabilities is the levels of the sickness and activity compensation. The rich have pulled ahead. The number of billionaires in Sweden has increased, but the poor have become even poorer. This year, the highest guarantee level in the sickness compensation is 12,163 kronor per month before tax. This applies if you are over 30 years old – if you are younger than that, you have a lower compensation.
We will tighten the grants, the Prime Minister promised. But, Madam Speaker, has the government not understood that people living on sickness and activity compensation cannot work? They do not have the capacity to work.
The Minister for Finance is completely right that the price base amount is increased at the turn of the year. That means that the sickness and activity allowance is increased by 9.1 percent. That is good, but it is far from enough. It means that a 25-year-old with full allowance at the guarantee level next year will have 12,553 kronor a month to live on. That is far too poor. And that should be compared with the parliamentary salary, which we members have, which is at just over 73,000 kronor and the salary that the Minister for Finance has at just over 150,000 kronor a month. We will tighten the benefits, the Prime Minister promised.
Madam Speaker! I am very aware of the economic situation, and I understand that the Minister for Finance does not have an easy task. But I have also thought I heard the Minister for Finance say that she protects sick and disabled people. Yet she chooses to move forward with a job tax credit only for us high-income earners, people who work and pensioners, not for those who are primarily affected by the high food prices. It is a bit difficult to understand.
The funkis tax is unfair and unjust. We Social Democrats already proposed in last year's budget that it should be removed, and we do so again this year in our budget proposal. But the Sweden Democrats and the government choose instead to increase the funkis tax. We will tighten the subsidies, the Prime Minister promised.
Therefore, I want to ask the Minister for Finance once again: What does the SD-led government intend to do so that the job tax credit does not disadvantage economically vulnerable groups? It cannot be right that they should pay the highest price for the fight against inflation when the Minister for Finance and I receive a tax cut?
Linus Sköld (S)
Madam Speaker! Thank you, Åsa Eriksson, for an important interpellation! Thank you, the Minister for Finance, for the opportunity to debate the job tax credit!
The year was 2007, and the Reinfeldt government came up with the brilliant idea to lower taxes for those who work - not for those who are too long-term ill to work, not for those who are too old to work, not for those who are disabled and cannot work, but only for those who work.
What they wanted to solve was the exclusion, it was said, and the job tax credit became, so to speak, the hammer in the toolbox. The exclusion was a nail—or it looked like a nail, because the exclusion did not disappear just because the job tax credit was introduced in 2007. But the Reinfeldt government tried again in 2008. The exclusion did not disappear. But the Reinfeldt government had found the hammer in the toolbox and thought that we'll hammer one more time, so the Reinfeldt government borrowed hundreds of billions to lower the tax further. The exclusion did not disappear. They tried again in 2010 and 2014.
So a few years passed. We took power. Those who were pensioners, disability pensioners, or people with disabilities received successive tax cuts so that the unjust gap that had arisen between them and those in gainful employment would be phased out.
But as is known, the government did not have majority support in the Riksdag during the previous term. In 2019, Elisabeth Svantesson had another social problem, an integration problem in the wake of the refugee crisis. I imagine that Elisabeth Svantesson and Ulf Kristersson looked at each other and said: Doesn't this look like a nail? Let's get out the hammer! And so they pushed through a job tax credit, the sixth one.
Here we stand now. Now we have problems such as inflation, war in the surrounding area, gang crime, explosions and shootings, and a healthcare system in crisis. Elisabeth Svantesson looks at these problems and thinks: Don't they look a bit like a nail anyway? And then she comes up with a seventh job tax deduction.
The tax cost, i.e., the lost tax revenues due to the fact that we give people employment tax credits, amounts to a staggering 150 billion this year. And now the Finance Minister proposes that an additional 11 billion should be spent on the same thing – on unfair tax cuts for those who earn the most.
Albert Einstein is said to have said that the definition of madness is to do the same thing again and again and expect different results. I wonder if he was referring to Elisabeth Svantesson.
Sofia Amloh (S)
Madam Speaker! I would like to begin by thanking my colleague Åsa Eriksson for the opportunity to debate the job tax credit here today. Politics is about prioritizing, and it is not possible to prioritize everything for everyone - we are in complete agreement.
We see how food prices are skyrocketing. There have been increases of over 20 percent in a very short time. We see that mortgage loans and rents are increasing - not once, twice or three times, but they continue to increase.
We have a deep welfare and healthcare crisis, which began already with the previous budget, that is, the current one. One sees now in the wake of this that region after region in this country is running a deficit. My own region, Sörmland, has warned 700 people of termination, and it will probably not stop there. The deficits are so large. Region Sörmland's moderate regional council has addressed the Minister for Finance regarding this problem and still has not been heard.
Who are the ones who will be laid off so that people will not be able to receive healthcare in time? Yes, it is nursing assistants who already have a very pressured and stressed work environment and work situation.
We also see that housing construction has declined and come to a complete standstill. We hear Byggnads say that construction workers need to be laid off and will go into unemployment.
In this tightly pressured labor market, retail employees have their hours shaved down and cannot make a month's salary. It is a tougher and harder work environment, which people even take sick leave from. One becomes ill from the job - from it being so understaffed that one cannot manage to go to work.
The working women who are often the subject of discussion are being punished again. They have to try to piece together their hours and make the work function, as well as life in general when they get home. They have to ensure that the food is nutritious for the children and sacrifice themselves at the breakfast table. It is these women who also need to take sick leave because they cannot manage to go to work.
The social problems are many and great, Madam Speaker. We need to solve them together, with common funds. But this government chooses to prioritize tax cuts worth billions while this is happening every day out in our municipalities and regions. We see how every single municipality would actually need to equip itself with better crime prevention work in order to catch children and young people in time and deploy resources when needed. But this government chooses to lower taxes.
I therefore want to ask the Minister here: In what way is it argued that this prioritization is the absolutely correct one, in the time we are in and with the social problems we have? Why do these billions need to go to those who earn the most?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I would like to thank you for the debate and thank the interpellor for this interpellation, a very important one.
We find ourselves, as already mentioned, in a very special time. Sweden is being pressured from many sides. We are pressured in terms of security policy. We have wars in our immediate vicinity that we are also involved in by supporting Ukraine; we most recently gave notice today of additional packages. We are ensuring that the pressure is increased regarding internal security with support for the police and the justice system. The Armed Forces are also continuing to be built up.
But the economy is also being pressured, to say the least. For the first time in 30 years, Sweden, together with other countries, has experienced sky-high inflation. And not only that – we are doing it at the same time as we enter a recession. All of this pressures Sweden, Swedish households and companies, and the welfare system.
That is why the budget I submitted here on the floor of the Riksdag on September 20 is a well-balanced budget for this situation. It will not increase inflation or be irresponsible, on the contrary. It will ensure that the important core tasks are prioritized while we support households in a very difficult time.
We support households in different ways. It is about fuel taxes and a broad tax cut for everyone who works. And we direct special support to those who have it the toughest, namely families with children with housing allowances. We know that they have the smallest margins.
But the most important thing that I and the government can do is to ensure that inflation is dampened. That is why it is important not to do what the Left Party and the Green Party, who are the Social Democrats' closest allies, want and ensure that the state would run a deficit of several hundred billion in the coming years. That would be to throw gasoline on the inflation fire and would hit people even further.
Lowering the tax for people who work and have worked, that is, pensioners, I think is fundamentally very good for several reasons; I will return to this.
Many of the compensations that we index with inflation, which I also mention in the answer – that is, that one is compensated. Guarantee pensioners received 850 kronor more per month this year and will continue to receive that next year. Also, the levels for sickness and activity compensation are indexed up. This does not mean that the level is high, on the contrary. It is a tough situation to live on sickness or activity compensation, but one is compensated for inflation.
The nursing assistant and the bus driver do not do that. They have seen how the entire fantastic real wage increase that we have had over ten years has sunk back, and that means that one has actually received a real wage cut. Precisely for that reason, it is right to lower the tax for everyone who works, and it is also reasonable to do so. It also strengthens the work line, because inflation has eroded the work line and made the difference between working and not working smaller.
Let me just comment on what has been said several times about lowering and tightening benefits. This must be seen in its context. If the interpellator has really listened to the entire press conference, she knows that the Moderaterna, unlike the Socialdemokraterna, see a problem when it does not pay off for too many families around the country for a parent to go to work if both are unemployed. It often concerns immigrated persons who receive different types of benefits. Individually, the benefits are not always particularly high, but the sum can still be high if the person has many children. I have met social heads all over the country who testify that it is difficult to work with this group if there are no incentives for them to go to work. This is what it is about.
Lowering taxes, especially for low- and middle-income earners, and ensuring that one cannot stack benefits to such a level that it does not pay to go to work is an important part of the work line. I am not ashamed to lower taxes for those who work. We will continue to do so when we can, because it must always pay to work.
Åsa Eriksson (S)
Madam Speaker! It is a tough situation to live on sickness and activity compensation even after it is adjusted for inflation, says the Minister for Finance. I can only agree. That is why it is so astonishing that the government nevertheless chooses to raise the funkis tax and not lower the tax for those who have the very lowest incomes.
The job tax credit is not only a relief for low- and middle-income earners, even though this is truly needed now when ten years of real wage increases have practically been erased by inflation. Therefore, we Social Democrats also have a job tax credit for low- and middle-income earners in our budget proposal. But the job tax credit also reduces revenues to the treasury, just as my colleague Linus Sköld clarified. It is about many billions. And if the revenues are not taken from somewhere else, this will have major effects on welfare.
We Social Democrats want instead to phase out the job tax credit for those who earn the most and completely remove it for those who have an income of more than 100,000 kronor per month. They really do not need society's support to afford food and rent. That is what is needed, however, by those who are long-term ill or have a disability and therefore cannot work and who next year, thus, have an income of at best a little over 12,000 kronor before tax. It is a big difference compared to the compensations that I and the Minister receive.
Madam Speaker! When welfare is eroded due to large tax cuts, it also hits the vulnerable in society hard. It hits those who are most dependent on healthcare, care, rehabilitation, and support. Just as my colleague Sofia Amloh said, it is about welfare workers who must run even faster, get even fewer colleagues, and have to manage even more. They now risk being signed off on sick leave due to stress and overload. Regions and municipalities also find it increasingly difficult to retain and recruit staff. It affects us all, but above all the vulnerable in society, who are most dependent on the welfare functioning.
This worries me very much. It will result in low compensations for people who live on sickness and activity benefits and are long-term ill or have disabilities, and the welfare state will be eroded even further. It is already on its knees, but it will become even worse next year because the SD-led government chooses to lower the tax for high-income earners instead of inflation-proofing the state grants to municipalities and regions.
Madam Speaker! We need to make it more profitable to move from benefits to work, said Finance Minister Elisabeth Svantesson. But for those who cannot work, what shall they live on? Therefore, I want to ask the Finance Minister once again: In what way is it profitable for the disabled and the long-term ill to have another job tax deduction for the Finance Minister, myself, and other high-income earners?
Linus Sköld (S)
Madam Speaker! I would like to remind how many social problems moderate governments have tried to solve with this tool. Last week, I debated labor market policy and education policy with Johan Pehrson, who is a colleague of Elisabeth Svantesson. He returns to the point that the solution to the skills supply concerns in the north would be to lower the tax for those who work.
The competence supply concerns in the north are linked to the fact that we have different economic conditions in different parts of the country. It is a boom in the north and unemployment in other places. We will need to get labor to move. Why should the labor move just to get a tax cut?
This is not a nail, just as exclusion was not a nail. The integration problems were not a nail either. Perhaps the hammer is not such a great tool for solving problems like inflation or the healthcare crisis?
Reducing the scope of the state treasury by 150 billion may not facilitate the financing of the welfare system. It may not solve the competence supply concerns. Unjust tax cuts cannot be the answer to every question, Elisabeth Svantesson!
Sofia Amloh (S)
Madam Speaker! A number of answers are still missing. I believe the Minister needs to elaborate on his answer, specifically when it concerns the healthcare crisis we have now been drawn into with this fiscal policy.
Region after region is running huge deficits. My own region, Sörmland, is laying off people, and even more large and intrusive measures will need to be taken.
It is about welfare workers – women in health and social care – who do incredibly important work every day. We have just emerged from a previous crisis in the country, a pandemic. It is women who have stood at the front when the pandemic swept across the world. Those women have not always been able to take leave and get the recovery they should have after this tough period, and now they are getting even fewer colleagues.
They are cutting away hours for the retail employees so that people cannot put together a monthly salary that is livable. They are working themselves into poverty.
In what way does the Minister mean that it should pay to work? What do we say to the women who cannot put nutritious food on the table for their children and cannot be at home for the homework, because they have been given a work shift at short notice? What do we say to the municipalities that cannot do the preventive work that is required right now? What does the Minister say to all of these?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Now, this debate is not about resources for welfare in general. But I can state that the 1,300 billion that municipalities and regions have as income every year is a lot of money. Next year, however, will be tough due to an inflation hump. Therefore, it is good and wise that four parties have agreed to allocate 16 billion to this. It will cover a large part of the deficit that is expected to be had. But we also know that it will be tough, and the state cannot compensate for everything.
Let me return to the interpellation, Madam Speaker, and what it is about. First, I will just say something very brief. It may sound in the discussion as if there is a very large difference in tax between the person who works and the person who has sickness and activity compensation. But at a level of 12,000, it is about 100 kronor a month. One may think that is unreasonable or not - it is up to the listener and the viewer and, of course, the one who reads the minutes afterwards to decide.
But why do we in the government and the coalition parties do what we do? It is quite simple. It is as I said. Number one is that ordinary hard-working people have received a substantial real wage cut - inflation has made everyone poorer. But they are not being compensated in any way. Therefore, it is right to lower the tax. Even though Linus Sköld now would like to make it appear as if it is only we who are lowering the tax, I can gladly state that even the Social Democrats are lowering the tax - 8 billion for people who work. I think that, fundamentally, is good. I welcome that you also think it is good, even if it doesn't sound that way from Linus Sköld.
Why do I think this is right and important? I recommend that all three in the debate read some of the evaluations that various institutes have made regarding what it has meant that we have lowered taxes broadly for people who work. It has, therefore, increased employment powerfully in this country, which has also generated resources for the welfare and protection systems.
What we saw in 2006 was an erosion, where very many people who had the capacity to work did not go to work. We implemented a tightening regarding both different compensation systems and tax. This has driven and developed Sweden positively. Employment is very high.
Therefore, this is right and proper. From an inflation perspective, it is completely right and proper that we make a broad tax cut for people who work and who have worked. But it is also right and proper from a structural perspective, because we know that more people must work – more people must enter the workforce – in order to be able to build prosperity and welfare strongly forward.
On the same theme, the government's policy to strengthen the work line concerns several different things. It naturally concerns tax – that is one part. But it also concerns, as I touched upon earlier, reviewing the benefit systems so that they, in their entirety, encourage work. This applies particularly to people who have immigrated here and who today may have quite high levels of benefits and who do not work because, for example, they have many children. We are now reviewing child allowances and other measures to increase the incentives so that especially mothers born in other countries will also enter the labor market.
This, together with vocational colleges, vocational training, reinforcement of the Swedish language, and focus on the right measures at Arbetsförmedlingen, strengthens the work line and ensures that more people will be able to work.
Since then, it is currently a very tough situation. We are in an inflationary environment. We are in a recession. We can get through this together if we do not fuel inflation but support people in the meantime. It will be tough for many. It is tough for many. But we will also get through this time together. I am fully convinced of that.
To strengthen future welfare and future prosperity, the government is working with a responsible policy that ensures we will also get out of the situation with high inflation as quickly as possible.
Åsa Eriksson (S)
Madam Speaker! Now I have asked the same question three times to the Minister for Finance, but I still have not received any answer. There does not seem to be any answer as to why those with the lowest incomes - those who are long-term sick and have disabilities - should pay higher tax than others and in what way it would help them that we high-income earners get lower tax.
We Social Democrats believe that the "funkisskatt" (fun tax), which the Sweden Democrats and the government are pushing through, is unfair and unjust. In our budget proposal, we remove it. Instead, we invest in families with children, in breaking the new recruitment to gangs, and in supporting those who have it the hardest economically.
For us, it is about the view of human beings. It is about that the sick and those with disabilities should not pay more in tax than people who work. But it is also about the hundred kronor that the Finance Minister spoke about. It might seem like a hundred kronor does not play a big role if you have an income of 150,000 kronor a month. But for the one who has 12,000, a hundred kronor makes a very big difference. It can mean that it lasts one more day without one, despite being 40 years old, needing to ask their parents for money for food. So that is how the situation looks for many of our people with disabilities today. They have no savings. They are incredibly economically vulnerable, and for them, every hundred kronor makes a big difference.
Madam Speaker! We Social Democrats use the same reform space that the government uses in its budget, but we reprioritize – from high-income earners and banks to the economically vulnerable and children. We believe that is what is best for Sweden.
I am now asking for the fourth and final time today: In what way is it good for Sweden to have additional job tax credits for the Finance Minister, me, and other high-income earners at the expense of people with disabilities?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I thank you for this debate. I believe I have answered the question in all my posts.
Let me be very clear. Yesterday we could see all four opposition parties' budget motions, that is to say, the responses to the budget that I have presented here in the Riksdag.
I can state a few things. Number one is that Magdalena Andersson has no government alternative. It is infinitely fragmented. And two of the parties that she intends to cooperate with, namely Vänsterpartiet and Miljöpartiet, are the most inflation-driving parties one can have in one's circle of friends, so to speak. Let us say that you were to negotiate together and obtain a majority - God forbid. You will not get it. But then it would mean that the disabled would face high inflation for many years to come, and the money that one has would become even less valuable. I still want to come back to that.
At the same time, it is the case that this is indexed up. But it will be very tough for many ahead if inflation continues to rise. So it is.
We have a budget on the Riksdag's table that supports those who have it toughest, which ensures that more people who work today – the nursing assistants and the bus drivers – receive some kind of support in these times. They have, in fact, taken a very tough hit. We are lowering taxes broadly for everyone who works and who has worked.
I return to the fact that it is a well-balanced budget. We will get through this together. It is tough now, but I am completely convinced that we will get through it in a way so that we actually see the light at the end of the tunnel. The faster inflation falls, the faster we will return to the economic cycle. And that will benefit everyone, especially those who have a disability.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.