Response to interpellation 2023/24:580 on income from business activities qualifying for sickness benefit
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
M notes the need for increased predictability for self-employed persons' sickness benefit 1 2. M argues that the lowest tax burden in almost 50 years favors competitiveness 2 and that the government has prioritized security from crime and inflation 3. M considers it poor judgment to abolish LOV and curtail freedom of choice 3. M wants to provide a broader picture of entrepreneurs' conditions within the social insurance area 4 and wants to make a collective assessment to improve the conditions for growth 4. S argues that the security systems for entrepreneurs must not deviate too much from general systems 5. S considers that competitiveness is created by infrastructure, health, and education rather than the tax rate 5 6. S argues that lowered taxes can affect welfare negatively 6. S argues that it is important to have regulations where SGI can be determined quickly and which take into account self-employed contributions 6. S argues that the most important thing for the business climate is to address school and infrastructure 6.
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 Anna Tenje (M)
Mr. Speaker! Mathias Tegnér has asked me what I intend to do to facilitate for entrepreneurs and make entrepreneurship safer in Sweden.
Mathias Tegnér points to the proposals on sickness benefit-based income, SGI, from business activities, which he drafted in his capacity as a special investigator in the investigation Clear, simple and predictable - Entrepreneurs' security system (N 2020:04). The investigation's final report An improved security system for entrepreneurs - simpler and more predictable (SOU 2021:98) was submitted on 14 December 2021. The report has been subject to referral.
The then government decided on 20 October 2021 that an additional special investigator should review the regulatory framework for SGI, i.e., the income basis for among other things sickness benefit and parental benefit (dir. 2021:90). According to the directives, the investigator was to base the work on the upcoming proposals from the investigation Clear, simple and predictable - Entrepreneurs' security system (N 2020:04). The assignment included, among other things, to investigate how the regulatory framework for sickness benefit-based income should provide increased security and predictability for the insured as well as lead to strengthened quality and efficiency in the processing and reduce incorrect payments.
The final report of the investigation A security system for everyone - a new regulatory framework for sickness benefit-earning income (SOU 2023:30) was submitted on 20 June 2023 and was subject to consultation until 22 December 2023. The proposal for SGI from income from business activities in that report differs from the proposal submitted in SOU 2021:98, among other things regarding which annual incomes from business activities can serve as the basis for SGI.
The preparation of the proposals submitted in 2023 is still ongoing. I cannot anticipate that work, but I note that there is a need for increased predictability regarding what compensation self-employed individuals can expect in the form of, for example, sickness benefit.
Mathias Tegnér (S)
Mr. Speaker! I thank the Minister for the answer.
Just as the Minister says, my question therefore concerns sickness benefit-earning income for self-employed individuals. But I would still like to start on another point, which the Minister was at for a moment in the previous interpellation debate – namely that questions linked to entrepreneurship are connected with several other questions. Security and growth are connected. Therefore, I would like to start with the broad perspectives.
Several international surveys show that companies in Sweden have good conditions and framework conditions in relation to the rest of the world. For years, Sweden has subscribed to top-ten placements in various rankings of competitiveness, for example, the OECD's index. That type of index measures a number of issues broadly, such as infrastructure, health, education, higher education, and innovation power. It shows that competitiveness does not just consist of a single issue, a single sector, or a single tax rate.
In this context, the safety nets for entrepreneurship are important, and some researchers claim that it is extremely important that we have robust safety nets for entrepreneurs if we also want more female entrepreneurs. If that is the case, I do not dare to comment, but it does not seem entirely unreasonable.
I mean that if more companies are to be created, the security systems need to be good and not deviate too much from our general security systems. It is in some way clownish in the discussion. The security systems for entrepreneurs must not deviate all too much from our general security systems.
Therefore, there are several measures in my investigation that would improve the safety systems at a low cost and which I believe should be reviewed. I also know that the business organizations viewed some of the proposals positively.
One of the challenges is that we cannot have different principles, and there is much that suggests it would be inappropriate to have different principles for entrepreneurs and for employees. On the other hand, the rules need to be adapted so that they actually work for both entrepreneurs and employees.
Since it is so complicated to have the income underlying sickness benefit determined, we know that it takes an average of up to 30 days for a self-employed person just to have it determined. The employee expects to receive compensation upon illness after a short period, but for a self-employed person, it takes an average of 30 days. There are horror stories where it has taken half a year just to determine how high the income underlying sickness benefit should be. So we cannot have that.
There are some proposals in the investigation that should be considered. I am fully aware that the second investigation was actually commissioned before we submitted our proposal. That can be reasoned about. My interpretation is that there was a focus on securing the safety systems for entrepreneurs, because there are several large gaps in exactly how one determines sickness benefit-based income. One possibility would have been to use the referred proposals, which receive almost unanimous positive responses in the referral statements. That would have been a way to go. Now the government and the minister have chosen another, and it is a pity.
Statsrådet Anna Tenje (M)
Mr. Speaker! I can once again state that I am pleased with the member's great commitment to simplifying for entrepreneurs to conduct their business. For those who become ill, there must be a good social insurance system that guarantees livelihood, and this applies to employees, employers, and thus entrepreneurs. On that, we are in complete agreement.
The question of whether one should have taken one investigation first and the other later is something the member can take up with their own party colleagues. I can only state that an investigation was commissioned, it was completed, it was referred, it was put in the filing cabinet, and another investigation was commissioned already before the other was finished, and that investigation goes, to some extent, against the proposals that the member gave in their investigation.
If one wants to achieve change and improvement for the country's entrepreneurs and business owners, and create good drivers for wanting to start and run companies and, of course, create growth and grow, one clearly needs to look at the question from a broader perspective. Just as I touched upon in my earlier interpellation debate with the member, it is about moving away from the silos and seeing the broad picture. The member also did this in their previous speech.
I also take the opportunity to point out other things that are important to create the right conditions. There, it is evident that lower taxes lead to both better conditions for companies and that more people will enter the workforce. LO's own cautious assessment of the first two job tax credits was that 75,000 years of labor were created. LO wrote then that the job tax credit strengthened the incentives to participate in the workforce.
Other instances that evaluated the reforms, such as the National Institute of Economic Research and the Fiscal Policy Council, arrived at even higher figures than LO did, so we know that lowered taxes favor labor force participation and result in more people entering the workforce, but also benefit the entrepreneurs.
Regarding other drivers, I touched upon that in the previous interpellation debate. We are now moving the positions forward by reviewing the 3:12 rules. We have also extended the time, as experts from abroad can receive reduced tax for working here.
We have today the lowest tax burden in Sweden in almost 50 years. As I mentioned earlier, it does not only benefit employees. It benefits employers, companies, and above all competitiveness, which the member mentioned in his previous speech.
To return to the member's question and interpellation: The investigation that the previous government commissioned - the second one, not the member's - was completed in 2023 and is under continued preparation. But as I touched upon earlier, they change the proposals that emerged there, the conditions for the investigation that the member himself wrote. I will therefore not anticipate that work, but I state again that there is a need for increased predictability regarding what compensation self-employed persons can expect when it comes to, for example, the sickness benefit.
Mathias Tegnér (S)
Mr. Speaker! I thank the Minister for the answer, even though we are less in agreement in this regard than before.
To begin with the description of reality regarding the various investigations, I must say that what is important is not which investigation one listens to, but that one actually creates better regulations for the companies.
I believe that if the Minister, for example, speaks with the business organizations, she clearly hears that rules that are all too narrow and not adapted for sole traders risk creating greater problems.
Then one way to go is the one I proposed in my investigation. But what is important here is not exactly which proposal one puts forward, but what is important is that we get a regulatory framework where SGI for entrepreneurs can be established quickly, that the regulatory framework for SGI for entrepreneurs also handles the fact that many sole traders are combinators and furthermore that one weighs in that entrepreneurs often have paid self-employment contributions over a fairly long period. There is, I think, a deficiency if one only looks at the most recently declared result.
When it comes to what creates growth and a good business climate, I would like to go back to the OECD study that I referred to. It is very clearly stated there that competitiveness is created by things such as infrastructure, health, education, higher education, and innovative power. This means that when one lowers taxes, it is a matter of lowering the right taxes and also considering what happens when the resources for welfare and infrastructure decrease. That is what I mean that Moderate supporters sometimes do not see.
Sweden is a small, export-dependent country, and that means that, for example, free trade is extremely important for our business climate and our competitiveness. Of all trade in Sweden, 70-80 percent is directed towards the EU, and now that we have a government that relies on a party that is in one way or another critical of the EU, there is a risk that it will affect, for example, our exports.
Free trade cannot be discussed in a vacuum either, because we know that there are winners and losers in free trade. In that case, it is actually the case that when we end up in a situation where there are successful companies and companies that are doing worse, winners and losers, and employees who are winners or losers depending on which industry and which company they work in, it is extremely important for there to be security and understanding for the international trade system that we have a safety net at the bottom.
A lowered tax here or there can only marginally improve the climate for entrepreneurs. But the big issues for having a good business climate in Sweden are about fixing the things that do not work so that we get a school system that actually works, security systems that one can rely on, and infrastructure that transports people from one place to another. It is central for the security system, and if one is to do that, it is not lowered taxes that are the most important.
For example, Lars Calmfors has also noted that the marginal effects in our tax system are not particularly high right now and that one should then prioritize other things, such as investments in infrastructure, rather than undertaking another earned income tax credit.
Statsrådet Anna Tenje (M)
Mr. Speaker! I really like where this debate is heading. We are talking about competitiveness, what is significant in a broader picture, what affects the country's entrepreneurs, what prevents them from growing, expanding and providing more growth but also what creates jobs.
Calculations made by LO have shown that job tax credits or reduced tax on work, when it pays more to work than not to work, also provide jobs - 75,000 new jobs or employment opportunities just through the job tax credits. It is clear that if you lower the tax on work, yes, then the number of jobs also increases.
I have noted that in the Social Democrats' budget, there are not those types of news. One also does not choose to lower the tax. For an ordinary family with children, it is more expensive to be Swedish with the Social Democrats' budget despite increased benefits.
When one listens to the business owners, one hears that increased security is at the top of the agenda and on the wish list – security from crime but also from economic crisis.
It is clear that it has been a priority for this government to work on both of those issues. Supporting households in an economically difficult time has also been absolutely crucial when it comes to the fight against inflation for the business sector and the companies, not least because the households are their customers. Extensive offensive investments in the justice system contribute to our ability to push back violence and crime over time, which nevertheless has gained a foothold and succeeded in spreading in Sweden for a long time. Now, a laborious but very important work is underway to reverse that development and push back organized crime.
Mr. Speaker! I do not think the Social Democrats represent a credible alternative, not least considering how divided the opposition is on several central issues. If one looks at the inflation management, which we have worked on over the recent years, it becomes obvious that the Social Democrats together with Vänstern and Miljöpartiet – if one counts in Centern, it goes completely against – want to borrow money that risks fueling inflation and contributing to high inflation. It will definitely not strengthen Swedish competitiveness. Borrowing several hundred million kronor would only fuel inflation and lead to higher prices, higher interest rates, and a more difficult situation for households and thus a significantly more difficult situation for the companies. It would, of course, affect everyone, all households, and dig deeper holes in people's wallets. It would also hit very hard against those entrepreneurs that Tegnér nevertheless seems to protect.
To relate a bit to female entrepreneurship, which we touched upon briefly earlier, I would like to say that here one truly shows poor judgment when it comes to wanting to abolish LOV and curtail freedom of choice, not least for the elderly. We see this most recently in Uppsala, where that possibility is being withdrawn. We know that there are the most female entrepreneurs precisely within the welfare sector. There, they want to curtail freedom of choice point by point and thus also women's opportunity to run businesses.
Mathias Tegnér (S)
Madam Speaker! It is difficult to handle all these questions in two minutes. It has become a debate where we have been a bit everywhere.
I want to start by saying something about the world we find ourselves in, a globalized world that is becoming more and more unequal. A busload of the absolutely richest people in the world own as much as half of the world's population. I think this perspective is also important. I believe that those who are successful in today's world also – as they often express themselves – are prepared to pay more tax.
If we are to talk about tax policy more generally, which I love as a member of the Committee on Taxation, we can state that there is a need for higher taxes on capital and lower on work. A broad tax reform would therefore have been good for Sweden. Unfortunately, the right in Swedish politics does not seem to think this is a good idea. The Prime Minister has dismissed it several times. It would have been good for Sweden. The problem is just that the government we have now does not see the problems with a few people becoming very rich.
When it comes to inflation, I believe the government minister mixed up different parties. The Social Democrats have never worked for us to have an unserious economic policy. We have also, in a government position, shown that we can take responsibility. On the other hand, there are many economists, for example Lars Calmfors whom the minister himself referred to, who think that we need to borrow more for investments in infrastructure.
When it comes to what creates jobs, the minister has several times only referred to one side: When you lower the tax, jobs are created. That is true. But when you lower the tax, revenue for the state also disappears, which is often used for something that also creates jobs. It does not become particularly comparable when one reasons in that way.
In summary, I hope, even though it is actually the minister and not the old government who has hidden it, that the minister will take a look at my investigation again. It contains many good proposals regarding how one can improve things for entrepreneurs in Sweden.
Statsrådet Anna Tenje (M)
Madam Speaker! I would like to begin by saying thank you for the debate and the discussion. I think it has been very pleasant, both this one and the previous one. When one discusses the conditions for entrepreneurs within the social insurance area, it is important to also provide a broader picture, and I think we have succeeded in doing that in a fairly good way today.
But I want to land on the question where we started, namely the one about the investigation. I can state once again that we have had an investigation since earlier, investigation 1. It has been referred for consultation. Investigation 2, which was commissioned during that time, has submitted its final report. It has also been out for consultation; I received it shortly before New Year. We are now processing it.
The proposals in the different investigations partially contradict each other. If one is to make a collective assessment to arrive at exactly how to proceed, I believe it is very wise to look at both the first and the second investigation, which I definitely promise to do. After that, one can make a collective assessment to see what is wisest to do and what should be taken hold of in order to improve the conditions to achieve increased predictability and better opportunities for entrepreneurs to run businesses, expand, and also create growth and more jobs so that we can then lower the tax.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.