Sweden’s minority government pulled two contested tax increase proposals to avert potential no-confidence motions and get a budget passed before next year’s election.
The Social Democratic-led government won’t go ahead with a plan to make more people pay state income tax and also backed off raising taxes on small business through changes to the so-called 3:12 rules. These measures would have raised about 4 billion kronor ($502 million) annually.
The four-party opposition had threatened to call no-confidence motions if the government proceeded with the tax increases. The plans were also scrapped against a background of solid economic growth and budget surpluses. The government this week announced it would have about 40 billion kronor to enact reforms as strong growth and falling unemployment fills up state coffers.
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“We stand firm that these plans would have contributed to decreasing inequality,” Finance Minister Magdalena Andersson said at a press conference. But we don’t want to contribute to a “circus” in parliament, she said.
The government will still test whether it can push through a new tax on airline travel but also announced it will compensate regional airports. The tax has been lowered to 60 kronor, 250 kronor and 400 kronor, depending on distance, according to the government.
Climate change is humanity’s most pressing challenge, Isabella Lovin, deputy prime minister and climate minister, said at the press conference.
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