Response to interpellation 2023/24:394 on a tax freeze for the country's municipalities and regions
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 sector's economy is strained due to demographic changes 1. KD considers it wise to avoid tax increases as households with low and medium incomes are hit hard 2. KD emphasizes the importance of priorities, such as retaining staff within elderly care instead of luxury bathhouses 3. M considers that municipalities often choose tax increases over wise priorities and exhibit waste 4. M argues that one should prioritize instead of raising taxes 3. S argues that a tax cap limits municipal self-government 5. S considers that the government is starving welfare and that a tax cap will cause welfare to take the hit 6. S proposes a tax floor 7.
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 whether I will push for a tax freeze, how I see such a tax freeze being designed, and how I believe such a tax freeze could affect the municipal sector and its autonomy.
The 2024 increase in the average total tax rate, i.e., the tax rate to municipality and region, is 13 öre. It is the largest increase we have seen in Sweden since 2015. Furthermore, the differences in tax rates in the country are increasing. This year, a person living in the municipality with the highest tax rate in the country pays 6 kronor and 32 öre more in tax per hundred kronor than a person living in the municipality with the lowest total tax rate.
The economic situation in the municipal sector is strained in 2024, and many municipalities and regions need to take measures to achieve a balanced economy and sound financial management. The economic forecasts show that the situation can improve in 2025. The long-term development, however, means that the municipal sector's financing continues to be affected by demographic developments. A declining proportion of the population will be of working age in the future, which negatively affects the development of the tax base while simultaneously leading to increased cost pressure in municipalities and regions. This can collectively mean continued upward pressure on tax rates.
We need to consider measures to meet these challenges in a long-term and sustainable way.
A well-functioning municipal economic equalization system is important to counteract differences in tax rates that are due to structural factors that the municipalities and regions cannot influence themselves. We also need to consider measures that strengthen the municipalities' capacity and their conditions to be able to offer a good welfare. Furthermore, measures that promote efficient resource utilization are important.
It was against that background that the government in April last year decided on additional directives to the Equalization Committee, which mean that, in addition to reviewing the equalization system, the committee shall also submit proposals to counteract high and increasing tax rates.
I look forward to receiving the Equalization Committee's proposals. These will be processed in the usual order, and I cannot precede that process by already explaining how different potential proposals should be designed.
Eva Lindh (S)
Mr. Speaker! The situation in municipalities and regions is more than strained. It is a very tough economic situation, especially for the regions. We have a healthcare crisis where one must get rid of important staff in order to be able to manage its finances. It is naturally deeply worrying.
Some municipalities, in order to manage welfare and the economy, have felt forced to raise taxes. That is also why there is a higher tax increase this year than there has been previously. At the same time, the government is presenting two additional directives to the investigation on how we should distribute resources to municipalities and regions. One of them concerns a tax cap.
It feels very strange in a time when the welfare state is on its knees that the most important thing the government wants to do is to stop tax increases and not to save the welfare state. If we really had an equivalent system that leveled the differences between municipalities and regions, perhaps it would not look so uneven. Many, but not all, of the municipalities that are raising taxes do so to manage to keep their heads above water and provide an equivalent welfare to their residents.
Mr. Speaker! In Sweden, we have a unique and very good system where all decisions that can be made close to the people are also made there. It is local self-government. This means that in the Riksdag, we do not decide on issues that can be decided by municipalities or regions.
One of the foundations in that is that municipalities and regions can levy taxes. It is this tax, the state grants that they receive from the state, and also fees and other things that allow them to decide for themselves how they should use those resources. It is fundamental to local self-government.
If one were to introduce a tax freeze - regardless of whether we call it soft or hard or how it is designed - it would limit the municipalities' possibilities to make their own decisions regarding both being able to increase their revenues and being able to allocate the money to what they see they have a need to do. It would be a limitation of local self-government if something such were done.
Now the Minister for Civil Affairs says in the response that it is not certain that it will be so and that one does not know how it will turn out. But the fact that the government gives a supplementary directive to the commission naturally provides an indication. That is how the government acts. It wants to show a commission that this is what it wants the commission to focus on.
Another thing is something that was referred to during a seminar with Svenskt Näringsliv. Svenskt Näringsliv is pushing for what is called a soft tax cap. If municipalities and regions raise taxes, they shall be deprived of state grants. It concerns me that the Minister for Civil Affairs answered that one is not entirely unfamiliar with that.
I want to know: What is the Minister's position on the question? Is he prepared to introduce a soft tax freeze or not?
Jan Ericson (M)
Mr. Speaker! I am not actually entering this debate to discuss the issue itself regarding potential forms of municipal tax freezes and the effects of these, but rather to comment on the interpellation on a slightly more principled level.
The investigation on municipal economic equalization, which we call the Equalization Committee, was appointed in 2022, and both I and the interpellator Eva Lindh are members. On April 23 last year, the Moderate-led government adopted supplementary directives which mean that the committee now also explicitly has a mandate to propose measures to counteract high and increasing tax rates in municipalities and regions. However, there is no directive, as the interpellator claims here, that the investigation should propose a formal tax cap. This is not in the supplementary directives.
However, it is mentioned in the supplementary directives that we in the investigation shall look at measures to counteract high and increasing tax rates and that additional measures aimed at municipalities and regions, which aim to promote more efficient resource utilization, may be needed. The committee shall also analyze the causes of differences in tax rates between municipalities and between regions. The responsible minister for these supplementary directives is indeed Minister Erik Slottner.
Mr. Speaker! I have now almost 18 years behind me as a member of Parliament. During all these years, I have actually never experienced a member in a government investigation, in the middle of an ongoing investigation, demanding that the responsible minister state their and their government's exact opinion in detail on an issue that is currently the subject of the ongoing investigation. It becomes a very strange procedure. If the responsible minister already had all the answers to the questions, the investigation itself and the directives to it would be completely unnecessary.
I therefore have a question for the interpellor Eva Lindh: Why not conduct the discussion on these issues within the framework of the investigation? That is, after all, why we are both members there.
Regarding the merits of the issue itself, I do not think, as I said, it should precede the investigation, and I do not intend to present either my own or the Moderaternas' possible opinion on the questions the interpellator poses regarding a municipal tax freeze. I will address that in the investigation to the extent that the question becomes relevant.
However, I want to emphasize that it is a problem that municipalities and regions all too often choose tax increases over wise prioritization. Constantly raising the municipal tax hits those with low and normal incomes the hardest. Furthermore, it has been established in many investigations and research reports and so on that there are no clear correlations between high municipal tax and high quality in regions and municipalities, nor between low municipal tax and low quality within the operations of municipalities and regions.
There are municipalities with low municipal tax that, despite the fact that large supplements are given to the equalization system, conduct a very cost-effective operation and manage to keep the municipal tax down. And there are municipalities that, despite enormous supplements from the equalization system, constantly raise the municipal tax and still fail to deliver good value for the tax money to the municipality's residents.
Priorities are often conspicuous by their absence. When a municipality, for example, builds a new swimming hall for 1 billion and is then forced to cut the milk for school children in order to manage the municipality's financial crisis, we get a clear illustration of obviously poor municipal prioritization. This is an actual example from northern Sweden. And it is not some extreme exception; it is, on the contrary, an example in a growing row of strange municipal priorities. Those who want more examples—and this perhaps is something for the Social Democrats to look at—of municipal and regional waste and inability to prioritize can find long rows of examples both with the Waste Ombudsman and with the Commission for Tax Benefit.
The discussion about what we get for our tax money should be conducted in the Riksdag instead of a member of the committee discussing an issue that is currently being investigated with the minister who is responsible for the appointed investigation.
Peder Björk (S)
Mr. Speaker! For those of us who follow the political debate, it is not unfamiliar that in these types of debates, whether about municipal finances or the state's finances, the solution for bourgeois politicians is lowered taxes. It is the solution to most social problems; lowered taxes shall solve very much.
Here, the government and the debaters are now again raising the idea of not only lowering the tax but also putting a stop to how high the tax may be in a municipality. In the name of honesty, there is obviously no intrinsic value in collecting tax. We have tax for a reason. It is for financing our common public commitments, where we have agreed that it is best for all of us to solve things collectively. We must finance that in some way, and therefore we have taxes.
But it is interesting to see this discussion also from a slightly different perspective. There are, in fact, a number of municipalities, not infrequently near metropolitan areas, that constantly lower the tax. Year after year they lower the tax. These are usually municipalities with very high carrying capacity, where there is a lot of tax to collect. But they are, therefore, lowering their tax.
Not infrequently, this affects the surrounding municipalities, as instead of taxing their own residents, these municipalities see to it that they utilize the welfare around them. This applies, for example, to cultural and leisure activities in other municipalities. These are utilized instead of using the opportunity to collect tax from their own residents.
That would not be particularly fair in a system where we are to jointly finance our commitments and where we try to ensure that there is an equal welfare across the entire country. In that case, one could imagine considering the possibility of setting a tax floor, that is, that the municipalities are not allowed to charge however little tax they want.
Since the Minister in this debate, and the SD-led government, have an idea about a tax freeze, I am a bit curious: Is there possibly also an idea about a tax floor?
Niklas Karlsson (S)
Mr. Speaker! It is naturally welcome that the government and the Minister show the concern they have regarding the growing differences between the municipalities. There is now a difference of almost 7 kronor, that is to say 6 kronor and 32 öre, between the municipality that charges the lowest tax and the one that charges the highest tax.
It is not reasonable for the differences to continue to increase. This has been noted by several governments through various government inquiries and in various debates in the Swedish Riksdag. Over the years, various measures have also been taken to try to manage this.
But when one chooses to describe reality, one can also choose which pictures to paint. It is correct as the Minister says that the total average tax rate in municipalities and regions is now increasing by 13 öre. But the difference that arises of 6 kronor and 32 öre is not due to that alone.
It is 13 of Sweden's 290 municipalities that are raising the tax, but at the same time, it is 24 municipalities that are lowering the tax. This should be taken into account, because what has happened in Sweden since 2000 is that the average municipal tax has increased by 2 percentage points - and this in a time when the society's total tax collection, what we call the tax ratio, has decreased by 7 percentage points and is now approaching record-low levels.
This naturally has consequences, and it has meant that we have reduced the tax take by approximately 400 billion kronor. That is almost 100 billion more than the municipal sector's total expenditures for all schools and pedagogical activities. A redistribution has occurred. One lowers the total tax take and then places additional demands on the municipal sector to fulfill its tasks.
The Minister of Justice will, of course, be given the opportunity to respond on how he views this, but one can still get the impression that both the crisis we are currently in and the path we choose forward are politically created and not economically created.
The municipalities have large deficits. They have great future challenges to meet both the ongoing operations and future investments. At the same time, we have a government that shows no significant interest in adjusting the state grants and giving the municipalities the conditions they need to meet their commitments. Now, another thought is also being put forward, namely to limit the municipalities' possibility to themselves collect the revenues they need to manage their operations by prohibiting the municipalities from raising taxes. You give nothing, and you prohibit the municipalities from financing their operations themselves.
No, the bourgeois downhill slope that we now see Slottner and the government pushing the Swedish welfare down is not economic. It is political. This will mean that one changes the Swedish welfare fundamentally. We are now seeing a system shift where economic arguments are used to starve the welfare, reduce our common commitments and force people to take a greater responsibility for their own well-being, their own education, their own elderly care, their own childcare and all other welfare that today exists in the municipal sector. It is very worrying.
Statsrådet Erik Slottner (KD)
Mr. Speaker! The last contribution was truly a contribution for conspiracy theorists, I must say. I will not use overly strong words in this speaker's chair, but there were many conspiracy theories and hidden accusations between the lines that sounded sharp but which, of course, had nothing to do with the truth.
I have also never been part of a debate where the work of an investigation is anticipated in this way. Since the interpellator Eva Lindh herself sits on the Equalization Committee, one can almost wonder if she knows that the investigation will submit proposals for a tax freeze. I, as Minister, have not given those directives, but it seems to be assumed that this is what the committee is to come to. I find that very interesting.
Eva Lindh says in her post that the welfare system is on its knees. It is very many households that are also on their knees in today's economic situation with eroded real wages, high inflation and high interest rates. In that case, we are acting very wisely in trying to avoid tax increases in the long run – especially increases of the municipal tax, which is not a progressive taxation but hits very hard against households with low and medium incomes.
The State does its part by increasing the job tax credit to provide a few hundred kronor a month so that more households can manage their everyday lives. I hope that the municipalities intend to do the same.
It is very difficult or actually impossible for me, purely constitutionally, to answer the questions that Eva Lindh has asked me, but if I am allowed to philosophize a bit more freely, I can say that of 21 regions in Sweden, there are 2 that are raising the tax. Then there are a number of municipalities that are raising and a number of municipalities that are lowering. The conditions therefore look different around the country.
This matter regarding a tax freeze is also no stranger to Swedish history. In 1991, we had a Social Democratic government until October that introduced a form of tax freeze. In 1994, it was another form of tax freeze, this time with a bourgeois government. The years 1997-1998 saw a third variant of tax freeze with a Social Democratic government.
The Council on Legislation has also stated that one can introduce different degrees or variants of a tax freeze without it being too great an infringement on municipal self-government. In that case, we at least have the Council on Legislation's assessment with us.
Then Eva Lindh interprets a conversation at a seminar with Svenskt Näringsliv in the autumn where I said that I was not entirely unfamiliar with a tax freeze as if I had said that I was going to drive a tax freeze. There is surely a very big difference between not being unfamiliar with something or completely saying no and actively driving something. We will have to see what the investigation concludes.
The fact is that if I were to answer the questions that Eva Lindh is asking here, some member of the opposition, perhaps from the Socialdemokraterna, would guaranteed report me to KU because I am interfering in an ongoing investigation. I completely agree with what Jan Ericson said about the fact that the interpellation itself is inappropriate because it is posed by a member who sits in the committee of the responsible minister for an ongoing investigation. Eva Lindh knows very well that I cannot answer. I should, purely constitutionally, not answer the questions being posed.
Then I think Peder Björk performed a logical somersault. To begin with, he says that conservative parties see lowered taxes as an end in itself, the salvation for all problems in the world. I have been part of quite a few debates where Social Democrats have seen increased taxes as the solution to all kinds of problems. Then he performs the logical somersault by first saying that there is no intrinsic value in tax and then opening the door for a tax floor. Then there really is an intrinsic value, if one thinks that there should be a tax floor for municipalities.
Eva Lindh (S)
Mr. Speaker! No, there is really no inherent value in raising taxes. We also know that when one raises taxes at the municipal and regional level, it means, because the tax is flat, that many low- and middle-income earners will struggle. It is precisely for that reason that we, or the government, need to make decisions to provide sufficient resources to municipalities and regions so that they are not forced to raise taxes or lay off staff and cut back on welfare. That is why it is so incredibly important that we support municipalities and regions so that they can manage the welfare that we truly safeguard.
So there is no intrinsic value in itself. But we must give municipalities and regions the opportunities to manage the mandate and the tasks they have themselves - to manage healthcare, schools, elderly care and everything else that we truly consider important.
If one makes deductions in the taxation rights that municipalities and regions have, does this affect municipal self-government? I truly think it is a debate that is important to hold: How do we view the possibilities for municipalities and regions to govern themselves, which I think are important to safeguard? How do we view their possibilities to manage the welfare they have?
In Sweden, we have an equalization system today. It is naturally very important, because municipalities and regions have different conditions. The equalization system is intended to equalize for things that one cannot influence oneself, for example how many inhabitants one has in one's municipality, how long distances one has, and how many who work and do not. All of this means, even though the equalization system is actually equalizing, that the municipalities do not have completely equal conditions. We therefore need to be involved, follow up and provide equal conditions to municipalities and regions and, in addition, conditions to manage the mandate they have.
I do not intend to comment on whether or not to sit in the investigation. We have a debate here in the Swedish Riksdag. We can ask questions and debate important matters. That is exactly what we are doing here in the chamber today. I still hope that I can get answers to the questions I raised in my interpellation.
Jan Ericson (M)
Mr. Speaker! As a Moderate, I am happy to speak, often and much, about taxes. I believe it was Niklas Karlsson who said that the Moderates' only solution is to lower taxes. I would like to counter by saying that the Social Democrats' only solution seems to be to raise taxes. In that case, my answer is always: What about prioritizing instead of raising taxes?
Is really everything a municipality does more important than retaining employees within home care, elderly care, preschool, or school? And is a luxury swimming pool more important than the children's milk for school lunch? That is the reality. That is how it looks. That is how priorities have been set in many places.
In the discussion on tax equalization, Eva Lindh said that one should receive tax equalization for things that one cannot influence oneself. That is obvious. We Moderates and the government think so too. It is obvious that we should have a system where the difference in tax capacity between different parts of the country and between small municipalities in rural areas and large municipalities in large cities is compensated. But no one thinks it is reasonable to have an equalization system where well-managed municipalities are forced to send money to poorly managed municipalities. That is where the problem lies. That is what creates that anger.
There was also a discussion about that we send too little money to the municipalities. We hear that all the time. In those cases, I usually say that our government actually has quite a lot to tackle. After eight years with the Social Democrats and the Green Party, the Swedish people have seen that unemployment has become one of the highest in the EU, gross crime and the fatal shootings have increased, electricity prices have skyrocketed, school results have worsened, healthcare queues have grown, interest rates have risen and the krona has weakened. We therefore have that to tackle at the same time as we are to arm the defense, arm the criminal justice system and support the households.
We have to fix all of that. One cannot send all the money that exists to only municipalities and regions. We must have a balance. I truly think we have managed to maintain that balance.
Peder Björk (S)
Mr. Speaker! I shall take over from where the Minister ended, at the logical absurdity. If anyone is making a logical absurdity, it is the SD-led government when it goes out and says loudly and clearly: We are investing in the Swedish welfare. We are investing in the Swedish healthcare. We ensure that resources are injected so that we develop and strengthen the Swedish welfare.
We see what is happening around the country, not least in the area of healthcare. There are deficits everywhere, in every single region. Somewhere, there is a shortage in the magnitude of 25 billion kronor for Swedish healthcare. Almost every region says that they will run with significant deficits this year. Collectively, it is estimated that up to 5,000 people will be laid off in Swedish healthcare during 2024.
Mr. Speaker! It is a logical mess, if anything. It is said that one is investing, but we see that welfare is on its knees and that staff are being laid off. I then think it is highly essential that we have the discussion on how we shall finance our common welfare. Is it to be a tax freeze or not? Shall the municipalities themselves be able to decide over their own reality, or shall a tax freeze be legislated? It is relevant to have that discussion.
In conclusion: I did not receive an answer to my question. Is there an interest from the Minister and the SD-led government to consider a tax floor?
Niklas Karlsson (S)
Mr. Speaker! It is clear that it is easier to talk about form when one has nothing to contribute on the substance. The Minister says that what I am presenting are conspiracy theories. I will take them again.
I state the following: Sweden's municipalities and regions have large deficits. They have major future challenges that they must manage. For that, economic resources will be required. We simultaneously have a government that is not undertaking any major initiatives to help the municipalities by ensuring that they receive the state grants they need.
Furthermore, the idea is now being presented to introduce a tax freeze, that the municipalities shall not be allowed to raise taxes. They receive no new money. They have great challenges. But they must not be prepared to finance the operations themselves. It is a political decision, not an economic decision. Therefore, I say that it is political choices that lie ahead of us.
In my world, it is not conspiracy theories. But if the Minister of Justice thinks it is and that what I claim is wrong, he has a couple of minutes of speaking time left to talk about how it should be done. How are we to be able to protect the welfare? How are we to be able to avoid the savings that lie ahead of us - 1.7 billion in Västra Götalandsregionen and 3.9 billion in deficit in the Skåne healthcare? How are our municipalities and regions to manage it and the upcoming challenges if the government puts straitjackets on them?
It will not add up. Welfare will take the hit, and that is fundamentally based on political decisions that the current government chooses to make. If it is a conspiracy theory, one is welcome to speak about what in my assertions is wrong. And please do speak about what the way forward should look like so that these municipalities can manage the commitments they have ahead of them!
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.