Tax cuts make it harder for Sweden to meet social needs

The expert body, the Fiscal Policy Council, has today released its annual report reviewing government fiscal policy. Oxfam Sweden welcomes the long-awaited discussion on the role of taxes in financing a safe, just and sustainable society.

Sweden faces several societal challenges: 700,000 Swedes live in material and social poverty, welfare is lacking in many places, we live in a precarious security situation and the climate transition requires major investments. Sweden is a high-income country that can afford to meet these challenges to improve people's lives and security. Failure to act could lead to even more serious consequences such as increased polarization and crime.

The Fiscal Policy Council criticizes the general earned income tax credits, which according to the report are an expensive way to increase employment and are expected to weaken public finances, which in turn risk crowding out important investments. The Fiscal Policy Council also assesses that the lost tax revenue is expected to be greater than estimated and confirms that higher taxes are needed elsewhere to meet social needs.

"We need increased tax revenues to meet both current and future needs. It is unreasonable that the government prioritizes tax cuts at the same time as poverty is increasing and resources for welfare, climate change and international aid are decreasing."

Suzanne Standfast, Secretary General of Oxfam Sweden

Another area where the government is criticized is the lack of a wealth register. Despite broad support from several authorities, including Finansinspektionen, the Riksbank and the National Institute of Economic Research, the government has chosen not to proceed with the proposal presented by a government inquiry in 2022, SOU 2022:51.

- The Fiscal Policy Council believes that Sweden should have a wealth register. "We would like to see the government reconsider the decision that has been made. Monitoring the development of wealth is one of many important aspects of understanding social development. It is important that we have an accurate picture of how things are in Sweden," says Lars Heikensten, chair of the Fiscal Policy Council.

"We cannot have a functioning and fair economic policy without knowing how wealth is distributed in society. A wealth register is crucial to understand developments, reduce inequality and make informed decisions. Sweden must increase transparency and stop turning a blind eye to reality."

Suzanne Standfast, Secretary General of Oxfam Sweden

Oxfam Sweden calls on the government to listen to the criticism of the Fiscal Policy Council and to take responsibility for a fiscal policy that reduces inequality, creates security and enables climate justice both in Sweden and globally.