Temporary increase of the roof deduction ceiling
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
S argues that it is irresponsible to raise the ceiling for the rotavdrag (roof deduction) when welfare needs resources 1 and that the reform benefits well-off households 1. S believes that the resources should instead be used for energy efficiency or new production 2 and that the government is not taking sufficient measures against crime in the labor market 3. V argues that the proposal is expensive, inefficient, and primarily benefits high-income earners 4. SD argues that the increase is needed to support the construction sector and help smaller companies 5. M argues that a higher ceiling provides incentives for maintenance 6, is necessary for functional renovations 7, and does not affect crime in the labor market 8. C proposed a lower increase to strengthen the green deduction 9. KD argues that the increase is necessary to promote employment and growth 10.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Hanna Westerén (S)
Madam Speaker! To act on behalf of others is very honorable. I am immensely proud that I have been entrusted to represent the Swedish people, my party the Socialdemokraterna, and my constituency Gotland. I mean that it requires hard work and, most often, difficult trade-offs between different needs that are each in their own right important. The responsibility rests heavily on us as legislators to ensure that everyone is equal before the law but also to ensure that portal paragraphs in the legislation are upheld. One such portal paragraph is the Health and Medical Services Act, which stipulates that health and medical care shall be provided according to need and that distinctions may not be made on the basis of, for example, geography or income.
It is becoming increasingly difficult, Mr. Speaker, to secure equitable health and medical care when the Swedish regions are being brought to their knees and the need for additional resources increases every day. There is money in our common systems, but there are differing views in Swedish politics on where the resources do the most good. The party I represent, the Socialdemokraterna, argues that it is deeply irresponsible to raise the ceiling for the deduction for renovation and enable even more luxury renovations in a situation where the most elementary thing, our welfare, has a crying need for funds to fulfill its basic mission.
Mr. Speaker! There are more complicating factors. Raising the ceiling for the rotavdrag without having addressed the flaws that the current design has built in creates further problems in already challenged industries. Additionally, the higher ceiling for the rotavdrag means that already well-off households receive significantly improved conditions, while less affluent households are left without incentives or better margins. It is crystal clear that the most well-off households are winners in this so-called reform, and that in a situation where the needs in welfare are enormous and, for example, an extra child benefit would have made a huge difference. Poor families with children do not become even a bit fuller by renovating the cities' cream of the crop.
Mr. Speaker! I must say that it surprises me somewhat that the SD government is pushing ahead with higher ceilings for the rotavdrag. It is not only we Social Democrats who believe that this so-called reform is gravely misguided. The National Audit Office is extremely clear: the rotavdrag is not cost-effective in its current form when it comes to either increasing the labor supply or reducing black wages in the industry. There could have been a hope that before one piles on more of the same, one would reshape or at least sharpen the rotavdrag, but no – the rotavdrag, which therefore fails in terms of reducing black labor and does not contribute significantly to higher employment, is to be expanded.
Mr. Speaker! To use our common resources in this way, when Sweden is in a recession and the construction industry is in acute need of measures that practically increase employment, is irresponsible and senseless. We Social Democrats advocate for a reformed rot deduction that allows for more measures for energy efficiency at the expense of other measures in the rot area. This makes our proposal public-financially neutral. This would be a much more responsible management of common funds but also significantly more favorable for a heavily pressured construction sector.
Mr. Speaker! Work-life crime is rampant in Sweden today. Enormous amounts are withheld from taxation, and people are suffering terribly in a sector where profit is the only thing that counts for unscrupulous actors. To raise the ceiling for the tax deduction without addressing measures to combat work-life crime is actually completely inconceivable.
Out of respect for the cohesive budget process, we have not reserved ourselves against the decision. But everyone following the debate can be reassured that we will follow the issue closely and continue to demand measures against crime against the working life but also a more responsible use of shared resources. To raise the ceiling for luxury renovations when welfare is bleeding and many Swedish households are on their knees is cynical right-wing politics with cruel and seriously redistributive effects. Sweden deserves so much better than this, Mr. Speaker.
Ilona Szatmári Waldau (V)
Mr. Speaker! In the bill, it is proposed that the ceiling for the rot deduction shall be temporarily raised and that separate ceilings for rot and rut shall be temporarily introduced. The proposal means that during 2024, one shall be able to use rot deductions for 75,000 kronor per person. That more people should be able to replace their functioning kitchens or build themselves a new patio with a tax deduction is the government's policy, while the person living in a rental apartment sometimes does not even get necessary maintenance performed.
Mr. Speaker! When the rot deduction was introduced, there were hopes for quite a few positive consequences. There were many positive goals that one wanted to achieve. Now, the Swedish National Audit Office has audited how well the deduction lives up to these objectives. Important conclusions in the Swedish National Audit Office's report are that the self-financing rate for the deduction is very low and that it would be cost-effective to lower the ceiling for the rot deduction.
The National Audit Office's report also shows that it is significantly more common to utilize the rotavdrag among households with high incomes than among households with lower incomes. More than half of the total deduction amount is used by the 20 percent of households that have the highest incomes. Since an increase of the ceiling benefits those who already to a large extent use the rotavdrag, an increase will benefit households with high incomes.
The government's own impact assessment shows that the proposal will primarily benefit the 10 percent of households with the highest incomes. It is primarily households in the metropolitan regions of Stockholm and Gothenburg that are benefited. The government's proposal is expensive, inefficient, and a waste of limited resources. The bill should therefore be rejected and the joint reservation of Vänsterpartiet and Miljöpartiet granted.
The Swedish National Audit Office states in its report that the rot deduction in its current form does not create sufficiently large tax revenues through reduced undeclared work and increased labor supply to justify the state's costs for the rot deduction. The Swedish National Audit Office also states that while households have reduced their demand for undeclared services, the use of undeclared wages has increased within the construction industry. The development is particularly clear among small construction companies, which also perform the majority of all rot services.
The National Audit Office emphasizes that many of the services that households perceive as white in the consumer link are, in fact, paid for with black wages in one or more links beyond the consumer link. I understand that in some cases subcontractors were needed, but it is extremely difficult for the individual to follow and control that all links pay tax. Therefore, we also need to review and limit the number of subcontractors, including in the construction industry but also in other industries, which is one of the issues that Vänsterpartiet is now driving ahead of the upcoming EU election.
Despite the Riksrevision's proposal to lower the ceiling for the rot deduction, the government is now proposing that it should be raised further. I truly believe that the Riksdag should follow the Riksrevision's recommendations and not implement the proposal for a raised ceiling for the rot deduction.
The proposal is justified, among other things, by the desire to promote employment in the construction industry. I agree that the construction industry needs further support now that construction has slowed down significantly. But it should not happen with an expanded renovation deduction, which in practice constitutes subsidies to high-income earners. It is not private individuals' renovations that will keep the construction industry afloat, but rather that we get construction moving again and that regions and municipalities can carry out the necessary investments that they are currently pushing into the future due to the starved budgets that the government has imposed on them.
Vänsterpartiet has instead proposed strong state support to keep construction and employment going, a support that can be used both for subsidized employment and so that municipalities and regions can move forward their investments. That is how we save the construction industry, not through an increased rotavdrag.
David Lång (SD)
Mr. Speaker! In this committee report, SkU24, proposition 86 Temporary increase of the ceiling for the rot deduction is addressed. Rut- and rot deductions were introduced in 2007 and 2008 respectively, and the purpose was to increase the labor supply and thereby stimulate employment and growth.
The proposal that is now on the table is a consequence of the budget bill that the government parties, together with the Sweden Democrats, negotiated and which was voted through in the autumn. That budget bill was based on the premise that Sweden is in a weak economic cycle that was expected to weaken further.
The focus for the budget was combating inflation while large investments needed to be made in defense and the justice system. The high inflation led to rising interest rates, which, in combination with weak global demand, was expected to increase unemployment in the country. The government has been expected to lead Sweden through all these difficulties.
Many steps have also been taken regarding investments in defense and the judiciary. Our fuel prices are now the lowest in Western Europe, which has contributed to continued reduced inflation, and interest rates have now begun to be lowered.
But the construction sector still has it difficult due to high financing costs and high production costs in combination with weak demand. To support the sector, the government wants to increase the rot deduction by 25,000 kronor on July 1 this year. The extended ceiling applies for the full year 2024, and the ceilings for rut and rot are also separated from July 1 so that it becomes 75,000 kronor for each.
Furthermore, municipalities are encouraged to adopt plans that enable new areas for small-house housing. The appropriation for Housing Policy Development is increased by 60 million kronor in 2024. To encourage municipalities to adopt or change detailed plans that enable conversions from premises to housing, the government allocates an extra 20 million kronor in 2024.
In this bill, however, it is only the increase of the rot deduction and the separation of the deductions for rot and rut that are addressed. But it sometimes feels difficult to completely separate the individual parts of a larger package of measures.
The proposal is expected to increase the demand for plumbing work, which in that case will benefit the companies operating in the industry. It also increases the possibility for these companies to retain their workforce in a tough situation until inflation and interest levels have gone down. It also belongs to the matter that it is primarily smaller companies that perform plumbing work.
This measure is, as previously mentioned, temporary. It will cease to apply at the turn of the year. I move for approval of the committee's proposal in the report.
Crister Carlsson (M)
Mr. Speaker! As mentioned, we are debating the temporary increase of the rotavdrag (deduction for repairs). The rotavdrag first came into force on 8 December 2008. The purpose of the rot- and rutavdrag (deductions for repairs and renovation) is, among other things, to increase the labor supply and thereby stimulate employment and growth, as well as to reduce black market work.
With rotavdrag, you can get a tax reduction for household services carried out at your home or at your country property. You can get a deduction for the labor costs but not for materials and travel.
One can deduct 75,000 kronor per year with the rut deduction per person. But now the proposal is that from July 1, 2024, the ceiling shall temporarily be 75,000 kronor even for the rot deduction. These are thus separated.
The construction industry and our construction workers are having a tough time. The high interest rate level and inflation have significantly worsened the calculations for new constructions and renovations. We have done what we could to extinguish the inflation fire, and it has yielded results. At the same time, the economy has begun to weaken, and we have seen how unemployment has begun to rise significantly more in the construction industry than in the business sector as a whole.
To support the construction industry and reduce the risk of increased unemployment, we therefore propose a temporary increase in the cap for the rotavdrag (maintenance deduction). This provides incentives to carry out repairs, maintenance, as well as conversions and extensions already this year, instead of waiting until interest rates and construction material prices have fallen. We hope this will contribute to maintaining production and employment in the construction sector.
In order not to harm employment in the renovation industry, we therefore propose separate ceilings for ROT and RUT. This ensures that those who use RUT services can still do so, even if they choose to renovate in the same year, without reducing the ROT allowance.
The Agency for Growth Policy Evaluations and Analyses has shown that employment in the niche for root work would have been 11,000-16,000 people lower without the root deduction. It is 11,000-16,000 fewer craftsmen working for private individuals.
It shows how incredibly important rot is for people to be able to afford to own their homes. Criticism is often directed at the fact that the greatest effect of rot lands in Gothenburg and Stockholm, because wages are higher there. But the rot deduction is almost even more important for those of us who live outside the big cities in the countryside.
In many places, housing values are so low that it does not pay to build new. But with ROT, the labor costs are at least reduced so drastically that it becomes possible for an ordinary family to change the waterproofing in the bathroom, rewire the electricity or drain around the house and get houses that last over time, which contributes to less environmental impact.
At the same time as everyone who works has seen the last few years' wage increases burn in the inflation fire and unemployment in the construction industry rises, some people suggest that rot should be abolished, which is completely wrong in this case.
At a seminar that the association Hantverkarna participated in here in the Riksdag, it was stated that 80 percent consider that the rotavdrag has a large or very large significance for the craft industry. The Swedish National Audit Office assesses that the rotavdrag has had a relatively large significance in reducing the demand for black market craft services.
With that, I move for approval of the committee's proposal for a decision.
Hanna Westerén (S)
Mr. Speaker! Thanks to Crister Carlsson for the speech!
Politics is about wanting, but it is also about choosing. Just as many of us have accounted for here in the debate, Sweden finds itself in a difficult time and in a difficult situation. Crister Carlsson himself was on that point. What I want to emphasize is that the welfare state is bleeding and the housing shortage is glaring, and in that case, we have different paths to choose.
The SD-government has obviously made its choice. It is to be renovated in fully functional kitchens and bathrooms, and this shall take place instead of investing in, for example, energy efficiency, new production, or for all parts instead of alleviating the woes in welfare or in hard-pressed households. Furthermore, the chosen measure is, according to the Swedish National Audit Office, inefficient.
Mr. Speaker! I therefore wonder how it happened when the Moderates chose this path. What is the raised ceiling for root de facto going to achieve that makes it worth the effort and the expense, and more worth than so incredibly many other measures that could have made a greater difference in Sweden today?
Crister Carlsson (M)
Mr. Speaker! The government is now doing many things. It is primarily fighting inflation. It has been priority one today and during the period.
The Social Democrats say that they want to improve environmental efficiency. They want, as far as I understand, it to be possible to make higher deductions for solar cells, water-borne heating and a number of other things. But there are also other things to do in a house.
In order for a house to last over time and so that we do not have to demolish the entire house and build a new one eventually, one must naturally renovate. As I said, it is not just about certain things but about the entire house. It can be drainage around a house. If, for example, it smells of mold in a bathroom or in a kitchen, one naturally wants to renovate it. It is not about any luxury renovations, but it is about purely functional renovations so that one can live in and use one's house over time.
Hanna Westerén (S)
Mr. Speaker! What Crister Carlsson is stating here is obsolete. We seem to be living in completely different realities and have completely different views of where the needs are.
I object somewhat to the description of so-called environmental measures. What I spoke about was energy efficiency, and we have quite strong indications that it is extremely beneficial both for the state treasury and for the individual.
We Social Democrats want housing to be built, that welfare and families with children should be supported, and that the construction industry receives incentives that make a real difference.
Let us move on, as Crister Carlsson and I are obviously living in different places. If we pause for a moment at organized crime and white-collar crime and speak of root in the same sentence, I wonder how it is that the Moderaterna are not more concerned by the link between organized crime and white-collar crime.
The National Audit Office warns of the risk of increased undeclared work, and I think it is so incredibly distressing that we, as Moderaterna and as the leading party in the government, do not take measures. If one raises the ceiling in ROT, why do you then not complement it with measures to limit the flow of money to the criminal gangs?
I cannot understand how this cannot worry the government. I have personally debated labor market crime with Finance Minister Elisabeth Svantesson, who says that the issue is an enormous priority. But when the government then comes forward with the raised ceiling in the ROT deduction, the measures against labor market crime are conspicuous by their absence. It has enormous consequences for the Swedish treasury, but it also has enormous consequences for the people who fall victim to labor market crime. It should worry Crister Carlsson. It worries me enormously.
Crister Carlsson (M)
Mr. Speaker! I think Hanna Westerén is mixing apples and pears. She is mixing in work-related crime, for which the government is taking incredibly many measures, as opposed to welfare crime.
We are increasing the rotavdrag so that even ordinary people, as I know from my background, who work in healthcare and who absolutely do not have fat salaries but who still use the rotavdrag, shall be able to renovate their houses and their apartments. I do not understand the opposite here.
The crime against working life in the construction industry must, of course, be able to be countered by the companies, and also by us with the measures that the government is now proposing. That we temporarily increase the rotavdrag from 50,000 to 75,000 kronor from July 1 of this year to January 1, 2025, does not affect this. I do not quite understand how Hanna Westerén manages to make her apples and pears add up.
Helena Lindahl (C)
Mr. Speaker! The Centre Party proposed in its budget motion for 2024 a halved increase of the ceiling for rottjänster compared to the one proposed in the bill.
We actually wanted the difference to go towards strengthening the green deduction. The green deduction can be compared to ROT and RUT; it is a tax reduction that you receive when you, for example, install green technology. It has become very popular, and today it covers, for example, solar cells connected to the power grid, charging points in the home, or different ways to store electricity at home. It thus covers the self-produced electricity.
We would like to expand the green deduction, because we see that people, not least during the winter, receive very high electricity bills. So it was also this winter, even if it perhaps did not become as expensive as the previous winter. Many people have electric heaters. It becomes very expensive during the winter months, not least if one lives in northern Sweden where it is quite cold.
Therefore, we would like to expand the green deduction to also include energy efficiency measures, meaning that one could install heat pumps, drill for geothermal energy, or use other green technology to lower their energy costs. We would also like the tax reduction to include water-saving measures.
Before I conclude, I want to say that I think it becomes a bit of a strange debate when one says that a temporary increase of ROT would only be something that is luxurious. Just like some others in this room, I know many who have both lower and medium wages and who live in the countryside around where I myself am located during the week, who use, for example, ROT. Many say that they would not be able to take these measures if they had not had the possibility of the tax deduction.
We find ourselves in an economic winter. Inflation has taken hold. Even though we see that it is starting to turn, many construction companies are doing very poorly. What is the alternative? Shall we let the construction companies be left without work and perhaps be forced to close down their companies? That also means that people will be left without jobs. Is that the alternative?
The temporarily increased roof deduction is simply about wanting construction companies to be able to survive. Furthermore, the increase only applies for the year; we must remember that. This is a measure so that the companies can survive the economic winter.
In conclusion: the Centre Party had, as I mentioned, a different proposal. It does not entirely follow the government's bill, but in order to safeguard an orderly and coherent budget process, I nevertheless abstain from participating in the decision.
Cecilia Engström (KD)
Mr. Speaker! In order to promote employment in the construction sector during the ongoing recession in the Swedish economy, the government has proposed that the ceiling for the rot deduction shall be temporarily raised and that separate ceilings for the rot and rut deductions shall be temporarily introduced during 2024.
The purpose is primarily to promote the construction sector by increasing demand for renovation work. This can be repair, maintenance, and remodeling or extension of people's houses during a period when the construction of new homes decreases. In this way, we can increase the labor supply and stimulate employment and growth in a temporarily vulnerable industry.
Sweden is in a difficult economic situation where many companies have been pressed hard by inflation. This affects the construction sector in particular, which faces increased prices and decreased demand. New construction has decreased during the recession. They decreased by 70 percent during the years 2021-2023, thus partly during the previous government. It is expected to remain at low levels in the coming years within construction.
According to the construction industry and the Craftsman Barometer from Beijer, 80 percent believe that the tax deduction for renovations has a large or very large significance for the craft industry. The tax deduction has been shown to reduce undeclared work and increase the supply of labor.
It is important that we maintain the competence that exists in the craft sector during the ongoing construction downturn so that we retain it within the industry until things turn around and construction increases again. Therefore, a temporary raised ceiling for ROT is important.
Mr. Speaker! I vote in favor of the committee's proposal in the report.
The deliberation was hereby concluded.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.