Response to interpellation 2024/25:174 on the compensation for so-called hidden value-added tax
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
KD argues that there are currently no proposals or initiatives to change the flat-rate calculation for hidden value-added tax 1. KD emphasizes that the issue is not prioritized and that the government has limited resources as other issues must be prioritized 2 3. KD denies that there is an epidemic of corporatizations in the municipalities and argues that it is a limited phenomenon 2. KD underlines that the government does not plan to take any new initiatives in the matter 2. KD believes that it is not a matter of lack of resources because resources are available if one wants 3. KD sees nothing in the monitoring of the world situation that requires an urgent intervention from the government's side 3.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Statsrådet Erik Slottner (KD)
Madam Speaker! Niklas Karlsson has asked me how the government has followed the issue of hidden value-added tax during the year and what measures I have taken or am prepared to take.
Municipalities and regions receive compensation for actual costs due to value-added tax within healthcare, school, and elderly care in their own operations. Private providers have the same cost for value-added tax in these activities but receive no compensation directly from the state. Therefore, municipalities and regions receive a flat-rate compensation, normally 6 percent, as compensation because the provider's price is higher since it includes value-added tax. The purpose of the flat-rate compensation is to prevent the value-added tax from determining whether municipalities and regions choose to conduct activities in their own or external management. In the investigation Review of compensation for so-called hidden value-added tax (SOU 2015:93), it was concluded that the flat-rate compensation was too high and a reduction to 5 percent was proposed, but the investigation also concluded that the flat rate was too low in certain areas.
The Government follows developments in several areas and sectors in several different ways, for example through media reporting, investigation reports, reports, municipal visits, meetings and seminars. Just as in the previous answer to the interpellor, no proposals are currently being prepared regarding changes to the flat-rate setting within the Government Offices.
Niklas Karlsson (S)
Madam Speaker! Let me first say something briefly about this matter of hidden value-added tax. The Minister and I, who work with this, are well acquainted with what it means, but for those listening, it may be appropriate to explain what it is about.
If any municipality chooses to carry out its activities through a private provider, that provider becomes obliged to pay value-added tax and then invoice the municipality for it. This means that the activity becomes more expensive than if it is carried out in-house. To create competition neutrality, the state has stated that the municipality that chooses to have a private provider shall be compensated with the value-added tax that the private provider is obliged to debit the municipality.
This is about fundamentally creating equal conditions. It is not the economy that should govern which provider shall manage the activity. The municipality shall therefore also not be able to make money on this, but it is other things that shall determine whether one chooses other providers or conducts the activity in its own capacity.
It has now been shown that the system of compensation for what is called hidden value-added tax overcompensates the municipalities when they choose other providers instead of their own management. This, in turn, has meant that a phenomenon is now developing all over municipal Sweden where the municipalities choose to corporatize their own activities and operate them in municipal limited companies so that they can get back the value-added tax with overcompensation. This means in practice that the municipalities are starting to engage in tax planning through privatization and are making money on this. But the money that is received by the municipality still comes from our common treasury. It is the state that sends them to the municipalities. It is not new money.
Madam Speaker! This is actually not reasonable. Already just under a year ago, I submitted an interpellation on the same matter to the Minister for Finance. State Secretary Slottner was the one who was responsible and answered the interpellation. The answer he gave then, I interpreted as him being well-intentioned. State Secretary Slottner could promise on the spot that one would continue to follow the issue but also said that the government had only "sat for just over a year".
Now we stand here again, a year later. The government has sat for a little bit longer. One has read a few more newspapers, listened to a little more radio, and had a few more meetings. I pose my question to the Minister again, given that we have the same position. That was at least what the Minister expressed in the previous interpellation debate. Competition neutrality must apply, and we have a responsibility to uphold it and ensure that the compensation is correct on all sides, so that one neither loses nor gains money on this. I wonder: What measures is the Minister now prepared to take to rectify the overcompensation we see in Kommunsverige regarding the value-added tax?
Statsrådet Erik Slottner (KD)
Madam Speaker! Just as appears in the interpellation response, there are currently no proposals for measures or initiatives in this area. Since the last interpellation debate on the subject about a year ago, there is nothing in our world situation monitoring that prompts any initiatives from the government. We do not experience that there is any flood of municipalities that are now choosing to corporatize operations because of this issue.
The previous government had the opportunity to change the flat-rate compensation. There was an investigation that proposed a reduction to 5 percent. The previous government chose not to proceed with it. It also received criticism from both Vårdföretagarna and SKR, who considered that the figures in the investigation would not be applicable in the reality we live in.
In a flat-rate system, it is often the case that some activities become under-compensated while others become over-compensated. The advantages are that it becomes administratively simple and very predictable.
There are therefore currently no plans for initiatives from the government in this matter.
Niklas Karlsson (S)
Madam Speaker! Today I receive approximately the same answer as I did a year ago. I must admit that it makes me somewhat disappointed, given that we nevertheless share the same view – if the Minister is honest in what he says, which I believe he is. A year ago, just as he does now, he expressed that the system does not capture this in an exact way.
I am not personally out to remove the standardization. I also see the advantages of it. But I think there is reason to reflect on this in light of the fact that there is no competition neutrality and that we, from the state's side, create incentives to privatize - not so that it would strengthen the operations and make them better or so that there would be principles or arguments in the municipalities for how they should develop what they are engaged in, but because it is purely economically advantageous.
Madam Speaker! I am also not looking for the Minister to speak in today's debate about how things should look in detail. But it is nevertheless the case that the government that has continued to govern the realm has an entire research institute at its disposal. This research institute is something we should be careful with and proud of. It gives us the conditions to update our social analyses when the outside world changes and to consider what we can achieve to conduct a policy that is right and proper.
This interpellation debate did not have to be so long. If it is as the Minister says, that he thinks this is unreasonable and that one at least would have needed to update oneself on what is present and what could be done about it, the Minister could have answered me and the rest of the chamber very simply and very briefly: "We shall take this seriously. We shall try to do something about it. But before we do, we need an update on what the reality looks like. I am prepared to take this further. I am prepared to possibly appoint an inquiry. Then we can return to the discussion."
I do not believe that we will reach all the way to perfection either. But there is always reason to rectify things that are wrong. Even if there is currently no flood of privatization in municipal Sweden - such a thing could of course occur - both the principle and the circumstances we live under constitute strong reasons to do more than just follow media reporting, listen to the radio, read newspapers and have a number of meetings with municipal representatives. We can do better. This also applies to a Christian Democratic government, I believe.
Statsrådet Erik Slottner (KD)
Madam Speaker! Yes, it would be a dream – a purely Christian Democratic government! No, I see that the Social Democratic members do not think so.
It is correct that we have the inquiry institute at our disposal in the government, as Niklas Karlsson says. It may be great, but it is far from infinite. Sometimes it can sound that way, but that is not actually the case. Even regarding inquiry procedures and the selection of inquiries, it can actually be quite tough prioritizations sometimes. We have very many ideas, but the inquiry possibilities are limited, not least because there is a limit to how many qualified lawyers we can access for different inquiries.
The government has an incredibly large number of investigations underway. We have started very many investigations and completed quite a few. Many of them are now out for consultation, and some of them are being converted into referrals to the Council on Legislation. Many have even led to government bills and to new legislation. It is the Tidö Agreement that is prioritized in this – what we promised the voters before the election is naturally prioritized, not least within areas such as justice policy, crime and punishment, and migration policy. Much also exists within economic policy, etcetera.
This is not a question that any of our parties have raised in the election campaign, at least not as far as I know, and it is nothing covered by the Tidö Agreement. On the other hand, we believe that there should be the same conditions for public and private providers, and this naturally applies to both the economic conditions as well as attitudes and other things. In that regard, I think it can look a bit hit and miss among some municipal representatives. We can see that some municipal representatives in different ways try to favor their own providers, for example by allowing activities in their own management to run at a deficit.
As said: This question is nothing that we have looked at yet, and it is not a question that we plan to look at. I am honest in saying that. It is not a prioritized question, and there are other questions within my area of responsibility that I think are more important than just this one, shall I say. I also do not see anything happening now in Kommunsverige that prompts me to take any new initiatives. A handful of municipalities are mentioned, mostly in southern Sweden, which are claimed to have been corporatized for these reasons, but it is absolutely no epidemic raging in Kommunsverige. It seems instead to be a rather limited phenomenon.
Niklas Karlsson (S)
Madam Speaker! I shall begin with a correction: No, we do not have a Christian Democratic government but an SD-led government. That is entirely correct, and I thank the Minister for correcting me on this.
It is like this: The Investigation Institute is large – so naturally – but one also has other resources at one's disposal. One has an entire state office, and one has an entire government secretariat. The possibility to delve deeper into this is therefore there. It is not a matter of lack of resources, but it is a matter of will. The Minister has now, on several occasions in two interpellation debates, said that one is following the issue but is doing nothing. I can state nothing other than that the answer is actually worth nothing.
Anyone who follows the developments surrounding the system of hidden value-added tax can observe that it has been adjusted under both Social Democratic and bourgeois-led governments. It was done for the first time in 2008, when an adjustment of the value-added tax compensation was made. It was a bourgeois government that did this. The National Audit Office conducted a review in 2011, and it was a bourgeois government that allowed this to be done. Proposals were also submitted in a public inquiry in 2015, which, under Magdalena Andersson as Finance Minister, led to a change in the drafting of the ordinance.
This is not a question of lack of resources, but it is a question of will. If I am to interpret the Minister's words charitably, I believe he actually thinks that one could look at this and do something better. I am not out to polemicize, but I am honestly and sincerely out to find a system that is better. I said in the previous interpellation debate that I am extending a hand so that we can do it together. The Minister replied then that if the Social Democrats do so, he is prepared to take that hand. Now it comes again, and I hope that the Minister takes it.
Statsrådet Erik Slottner (KD)
Madam Speaker! We do not shake hands until the debate is over, and the Minister always has the last word! It is a custom and something I think is worth holding onto.
I must also say that I am impressed by Karlsson's good memory regarding the previous interpellation debate. However, it is very possible that he has read it in writing before this debate – that could happen.
Then I can still say that the Christian Democrats have more ministerial posts in Sweden than the Sweden Democrats have. The Sweden Democrats have zero ministerial posts because they do not sit in the government. It is instead the Moderates, the Christian Democrats, and the Liberals who do, and it is thus not an SD-led or SD-controlled government – or any SD government at all. It is a bourgeois government consisting of three parties that have a parliamentary cooperation with the Sweden Democrats. That is how the election result turned out in the democracy we live in, and we said before the election that these four parties would in some way form a majority in the Riksdag if they received a majority in the election.
It is correct that the possibility naturally exists. It is clear that there is a possibility to look at this issue through an inquiry or other resources, but it is not the highest priority. We have so incredibly much on our agenda. I have so much on my agenda that I want to do, and I do not have time to do everything that I would very much like to do. The resources are not infinite, after all, and we must prioritize.
It is, therefore, entirely correct that this is not actually about a lack of resources in that sense, because it is clear that there are resources if we wanted to. However, there are other things we would actually prefer, and this is not a prioritized issue for the government – right now, based on what we know now. It is very possible that things could happen in the area that would cause us to return and look at this, but right now I see nothing in our global monitoring that would prompt any emergency action from the government's side to change this. Instead, we continue to work with the issues that are more prioritized for the government.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.