Response to interpellation 2024/25:36 on inefficient growth policy

Finansministern Elisabeth Svantesson (M)

Madam Speaker! Linus Sköld has asked me which alternative measures the government considered to create growth, beyond the announced proposal on the abolished tapering of the job tax credit. He has also asked me which measures the government intends to take to create growth by supporting households with the smallest margins.

Sweden's growth rate has, during recent years, been among the lowest in the EU. The government takes this very seriously. It is only higher growth that can sustain future welfare. With higher growth, tax revenues increase which can be used to finance, for example, school, healthcare, and elderly care. Now that high inflation has been fought, the government therefore shifts focus from fighting inflation to investing in a wealthier and safer Sweden.

A key part is to implement reforms to increase Sweden's growth. The budget bill for 2025 contains a broad approach with reforms to increase Sweden's growth. This includes, among other things, historical investments in infrastructure, the largest investment in research ever, and tax changes that make it easier to run businesses.

The Government also proposes that the highest marginal taxes be lowered in order to increase the incentives to educate oneself for a highly qualified profession and to put in extra effort at work. The lowered marginal taxes are expected to have such a positive effect on the economy that the reform is assessed to be self-financing in the long run.

At the same time, the government is aware that many households still have it tough as a result of the previously high inflation. Therefore, the government supports households broadly in the budget bill through an enhanced job tax deduction and continued supplementary grants in the housing allowance. The government also proposes an increase in the amount for individuals who receive sickness benefit in special cases, as well as for the housing supplement. In this way, growth is created in the long run while households with the smallest margins are supported. These are important steps to build a wealthier and more secure Sweden.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Linus Sköld (S)

Madam Speaker! We are talking here about a tax cut for those with the very highest incomes. It concerns those who have the very largest margins, one can assume, and who have not suffered any hardship during the entire inflation period we have behind us. They are asking the government for 5 billion to lower the tax for them. Yes, almost 5 billion it is - to be honest, it is 4.7 billion that it is estimated to cost.

These 4.7 billion is an almost three times larger sum than the one the government is increasing the appropriations for research by next year. What the Finance Minister claims is the largest investment in research ever is, therefore, a third of what the Finance Minister is pouring over the country's wealthiest people.

This interpellation takes its starting point in growth, for that is how the Minister for Finance has justified the proposal. It is to create growth. If the Minister for Finance has 4.7 billion and wants the maximum possible growth for that money, the quote that the Minister for Finance gave when Svenska Dagbladet asked what she intends to do with the tax cut becomes very telling. I will not accuse the minister of conducting policy to favor her own wallet - I do not believe she has reason to do so since ministers already have good economic conditions as it is - but the Minister for Finance's answer is nevertheless telling, and it is closely linked to the reason why I assert that this is inefficient growth policy.

To the question of what she should do with the money, the Minister for Finance replied that she has no thought at all about what she should do with the money. Those who have 156,000 in fees every month do not need to have any thought at all about what they should do with an additional 4,000 kronor a month. It might be enough to travel with the family to Gran Canaria, but the Minister for Finance can already afford that.

If you instead asked municipalities and regions what they would do with 4.7 billion next year, they would answer: We would hire staff with normal wages, we would purchase school books and consumables, and we would provide better food in school cafeterias and in hospitals.

If you asked a single parent the same thing, they would answer: I would buy better food, I would buy winter clothes and I would buy toys. I might buy new skates, because the kids have outgrown the ones they had last year.

A pensioner with small margins might have bought something more than crispbread to keep in the pantry or booked a train journey to the grandchildren that otherwise would not have fit into the budget. The one who was unemployed might have answered: I would buy a new jacket to wear to my next job interview.

The Finance Minister does not know, however, and this is the point. If these 4.7 billion had been used to support the households that have the smallest margins or to invest in welfare, they would have been consumed. It would have led to higher growth. Now the Finance Minister is burning 4.7 billion to secure the purchasing power of those who already have the very greatest purchasing power.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Finansministern Elisabeth Svantesson (M)

Madam Speaker! I would first like to thank Linus Sköld for having raised the discussion on growth here in the chamber. I think that we in Sweden generally, and also here in the chamber of the Riksdag, far too rarely speak about what is required for Sweden to continue to be a wealthy country and become even wealthier in the future. We have great needs.

I would like to begin with a brief look back. In the 1870s, Sweden was one of the world's poorest countries; we even received international aid because of this. Then came a journey that Sweden made over 100 years. It was a fantastic journey, and one can speak for a long time about the reason. There are many components that made it so that Sweden 100 years later had become one of the richest countries.

It is about entrepreneurship, and it is about hard work. It is about the state and capital having worked together and that the parties have been strong. Just the word "together" I believe is one of the keys. But it is also about more people gaining access to the education system, that we have invested in research and that we have removed harmful taxes - both S-marked and M-marked governments. All this together gave a fantastic growth.

When I look forward and see what Sweden needs to become in 10, 20 or 30 years, I think a lot about exactly growth, Madam Speaker. If we are to be able to meet all the needs we have – and in Sweden we have great needs for investments in everything from welfare and infrastructure to energy systems and much more – the economy needs to grow. Some think it is better to run with large deficits and borrow to finance this, but that the economy grows is central to prosperity. I believe that Linus Sköld and I share that view.

Since I took on this job, it has been important for me to really go into depth and take responsibility for the long view. Even though I do not have this job for particularly many years—one never knows, but it could of course become very many years if Linus Sköld does not get his way—I think that we want to take responsibility for what lies ahead of us. Therefore, we appointed a productivity commission, for example, and it is working at full capacity. It is experts and analysts who are reviewing the productivity in Sweden.

Then one can ask why. Yes, because growth comes from two things: hours worked and productivity. Sweden is in many ways a productive country, but there is still more to do. Proposals have been worked out, and I have received a partial report that I hold in my hands. I do not always carry it with me, because it is a bit heavy, but there are many good proposals here. They will return next year, because the focus is on increased growth.

The budget that we have presented for next year and which is now being processed in the Riksdag focuses on both long-term and short-term growth. Now that inflation has been fought, and the Riksbank is lowering interest rates because we have together fought inflation. It eases the pressure on households and companies, and in fiscal policy, we can switch over to focusing on what provides growth in the short term – getting the economy moving again – but also on the long-term.

It is, of course, about the tax system, just as the Productivity Commission also mentions in the partial report. It is about infrastructure, red tape for companies, skills supply, and many other things. We are working on a broad front to ensure that Sweden becomes a country where growth increases.

Now we move to the question that Linus Sköld has asked me. I personally think this was a good starting point - but others can judge that - because growth involves many things. The tax system is an important part. We have a progressive tax system in Sweden, and those who earn more therefore also pay, in percentage terms, significantly more. If you earn 125,000 kronor, you have eleven times as high a tax as if you earn 25,000 kronor.

But the marginal taxes, which apply to the extra work one does, have become quite high. If you earn an extra hundred kronor, you keep 44 kronor of it today. I do not think that is quite reasonable, rather one should be allowed to keep half. This was once the idea even for the Social Democrats.

It is structurally correct that it should pay off to study, and we know that it is self-financed. There is also a dimension of that one should be allowed to keep half of what one works for.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Linus Sköld (S)

Madam Speaker! I thank the Minister for Finance for the answer.

I naturally agree that inflation has fallen back – that is indisputable. But the prices of milk or coffee have not fallen, and I think the government is using a dangerous communicative image when they say that things are brightening.

In the long term, low inflation is a prerequisite for real wage increases and the brightening that the Finance Minister speaks of. But when one uses that to lower the housing allowance for families with children next year, one risks giving an impression that prices are now falling, that it will become cheaper to live, and that the rent for these families with children will go down. This is, however, not the case, but the dramatic price increase that has occurred in recent years remains. Wages have not increased enough to catch up with the price increase, and the adjustments in the form of, for example, reinforcements of the housing supplement that have existed have not corresponded to the price increases a family with children has experienced. With this as a motive, one still chooses to reduce the reinforcement next year.

To put this into perspective, one can ask which families with children we are talking about here. Well, it is approximately 100,000 families with children who are entitled to this support. They have an average income of 16,300 kronor together in the household, which happens to be quite exactly 10 percent of what the ministers have in fees. That is what one has in joint incomes in the households. For those people, the disposable income is reduced in the short term – that is, from January 1st next year – by approximately 400 kronor. For the ministers, who have incomes ten times as high as those households, the disposable income increases by 4,000 kronor monthly next year.

What the Finance Minister says here, if one draws the line for this policy and starts to talk about what happens in the long term, is that growth is created by the gaps increasing – by the poor becoming poorer and the rich becoming richer. But we know that is not how it works. The historical description that the Finance Minister gave of the Swedish development is in many respects correct and not at all decoupled from equality. On the contrary, the equality we have had in Sweden, in combination with a market economy, has been "prosperous" and given us good growth for many years.

Now the Finance Minister is changing direction and says that we should deliberately have larger inequalities in this country because there need to be incentives for work. It is a funny coincidence that the right always says that the rich need more money to be motivated to work, while the poor apparently need less money to be motivated to work. What this actually means is that one is protecting the privileges of the privileged.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Finansministern Elisabeth Svantesson (M)

Madam Speaker! I want to start by saying that I have probably done more for ordinary wage earners than Linus Sköld will ever do. In opposition, we, together with other parties, lowered taxes broadly so that more wage earners would keep more of their own wages. We continue to do that this year. We lowered taxes broadly – instead of letting the break point be adjusted upwards, we made a broad tax cut for everyone. We are also doing that next year.

For me, it has always been important with distribution and that the one who works should be able to keep more of their salary. I may have a different view on tax than Linus Sköld does. My basic attitude is that it is the one who works who has brought in this money.

I completely agree with Linus Sköld regarding the consequences of inflation. It can certainly also be a dangerous communication. This does not, however, mean that I do not know that a huge number of people are having a tough time, especially those who have not had all their compensations adjusted for inflation. Many have indeed received it, and it is very good that it is so. Many ordinary wage earners, however, have not received it, and prices are still high.

That is why it has been important to stop inflation. It has also been important for us to continue strengthening households' purchasing power. That is why we are making a broad tax cut next year.

I also want to say, Madam Speaker, that the reduction obligation has done a lot for many people. The diesel price was lowered by 4 kronor on January 1st this year. The fuel taxes have also been lowered.

Approximately 4 million people have an ISK savings account. Both people who earn quite a lot and ordinary wage earners save money in an investment savings account to be able to think about their future and to get a return on the money.

We continue to extend the housing allowance. It is still at a higher level than normal.

We are working broadly to strengthen households. This is my starting point. Now Linus Sköld is trying to impose a description on me of how I view people. I can only state that I joined the Moderaterna during a time when I was very tight on money. I joined because I believed in the economic policy. It was partly about every person having the opportunity to have their own wage to live on and pursue their life journey, and partly about the Swedish economy and what we do collectively growing.

I have great respect for the fact that Linus Sköld does not like that one lowers the marginal tax from 56 to 52 percent. I think, however, that it is completely reasonable for both structural and fundamental reasons.

We do that now. We know that this, as the Productivity Commission and the OECD among others say, will be self-financed within just a few years. That is an important starting point for me.

One can do several things at the same time. One can prioritize in the state budget, which I know the Social Democrats have very difficulty doing – they would rather raise taxes. However, we have done that now. Furthermore, we have another level of aid. We also ensure that the interest deduction on unsecured loans will now be phased out.

All this means that we can finance more money for welfare, which this year has received 22 billion kronor; it is important to remember. We also see that moving forward we need to do what is long-term right in order to strengthen growth.

I am pleased with the budget that I submitted to the Riksdag in September. It is a budget that is good for Sweden and for those of us who live here, actually regardless of exact income level or - if one works - what salary one has. I do, however, think it is reasonable that it pays to study and that there are not marginal taxes that are over 50 percent. I do not know if the Social Democrats have abandoned the basic idea - so it absolutely could be.

I think it is important - just so we have it clear for ourselves - that the person who watches this, or reads the minutes afterwards, knows that it was the Social Democrats who, a few years ago, removed the defense tax in Sweden. It was about a little more than 4 billion.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Linus Sköld (S)

Madam Speaker! The government is lowering taxes for those with the very highest incomes. It costs 4.7 billion. The question I have posed and which I intend to conclude my final speech with so that the Finance Minister can actually answer it is: If one wants to create growth for 4.7 billion, would it not have been better allocated funds to give them to welfare or to those who have the smallest margins? Then the money would have been consumed and created greater growth. Does the Finance Minister not agree with that? The very premise of this interpellation debate is that this is inefficient growth policy.

The Minister for Finance has defended the government's line to give exactly 0 kronor in increase in the general state grants to regions and municipalities next year. I heard the Minister for Finance in the budget debate say that regions and municipalities do not need any supplements next year. But if one is to believe the government's own forecast, prices and wages will increase by 3.43 percent. It will cost 6 billion, and here the 4.7 billion could have helped. Then regions and municipalities could have maintained their service and had more employees, and we would have had growth on these funds. But now they will end up in tax-exempt savings. Ministers and directors will get these funds, and they will laugh all the way to the bank when they open the next tax-exempt savings account. I think this is provocative, and I believe a good number of voters agree with me that the government's prioritization is provocative.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Finansministern Elisabeth Svantesson (M)

Madam Speaker! It is a Friday in November, the sun is shining and we stand in the chamber discussing important issues. Then the members should not lie and say that I think regions and municipalities do not need any money at all next year. I have never said that. Furthermore, I would not have included a good deal of targeted grants and, for example, the special sector grant to the regions. They need money next year. But it is also important to know that the regions and municipalities will have 50 billion lower pension costs next year because we have brought down inflation.

My starting point is that I want to accelerate the Swedish economy. The tax cuts we make with the broad tax cut, changed marginal taxes, etc., will increase demand in the economy together with the Riksbank's monetary policy. This will accelerate the economy.

But in the long run, the economy needs to grow, and I rarely hear the Social Democrats talk about that. I take this issue very seriously, and we are doing a lot with infrastructure, research, regulatory simplifications, and energy systems so that Sweden will become a wealthier country in both 10 and 30 years.

Madam Speaker! Finally: One can do many things at the same time if one prioritizes, and if one cares about those with the very smallest margins, one should not raise the municipal and regional tax. In Stockholm, it is raised for two consecutive years, which hits ordinary wage earners the hardest. When the ordinary municipal tax is raised, those living in Stockholm find it even tougher. Those with small margins who work and toil and have not had their wages adjusted generally with inflation also receive a tax increase from the Social Democrats in both the region and the municipality. This obviously affects their economy, life, and everyday life in an inappropriate way. Why does this happen then? Yes, because the Social Democrats often have difficulty prioritizing. They would rather raise the tax.

The interpellations debate was hereby concluded.

The speech at riksdagen.se, in Swedish (opens in a new tab)