Eight tax proposals that could become reality this autumn

The other week I wrote a column about the relatively few and cautious proposals put forward in the tax area during the spring. On Monday, there were a handful of additional proposals, eight to be precise. These have been sent out for referral – The companies will of course respond. Already now, however, we can summarize the direction of the proposals.

It must be emphasized that these are proposals, and will be the subject of budget negotiations within the Tidö collaboration, and later proposal processing in the Riksdag this autumn. We will therefore have to return to what is actually implemented before the budget bill.

Small steps forward in the tax area – bigger steps are needed

1. Reduced tax on earned income and pension

Is reduced tax included in the fiscal framework review?

The biggest puck, in kronor, is an expansion of the employment tax deduction (for earned income) and the increased basic deduction (for pensions). In total, it is just under ten billion kroner in reduced tax. On average, the tax is reduced by approximately SEK 1,900 per person per year through the employment tax deduction and by approximately SEK 1,100 through the increased basic deduction.

Reduced income tax, especially for low and medium incomes, is an important step to strengthen the line of work. At the same time, there is still a lack of proposals that would lower Sweden’s internationally very high marginal taxes on higher incomes.

Ministry of Finance: Proposal for further reduced tax on earned income and pension (pdf).

2. Extended grow support

The employer’s tax – an April Fool’s joke no one laughs at

The reduction in employer contributions for the first employee, the so-called grow support, is proposed to be extended to the second employee as well (for new hires), and the wage ceiling is raised from the current SEK 25,000 to SEK 35,000. The maximum reduction in employer contributions a company can receive increases from approximately SEK 5,300 to approximately SEK 7,400 per month per employee. This is estimated to mean that approximately 3,800 new jobs can be created.

The proposal is very welcome – The companies have been calling for an extension of the grow support for a long time. The increase in the wage ceiling corresponds in principle to the general wage trend since the level of SEK 25,000 was introduced in 2017. A higher level, for example SEK 40,000, could thus have been justified.

Something that does not seem justified, however, is that it is proposed that the grow support can no longer be applied by individual traders who employ their first employee. Even if a minority of solopreneurs who have used the grow support are sole traders, there are no obvious reasons why they should be excluded in the future.

Ministry of Finance: Proposal for extended growth support – reduction of employer contributions for up to two employees (pdf)

3. Permanently scrapped index calculation of electricity tax

The annual calculation of the energy tax on electricity is proposed to be abolished. This means that the tax will remain at the 2024 level, i.e. 42.8 öre per consumed kilowatt hour. Initially, this means SEK 910 million in reduced electricity tax in 2025, and in the longer term SEK 1.6 billion.

This change is also welcome. Reduced electricity tax was an election promise from several government parties, and last year a proposal was submitted to pause the index increase this year, which was met with approval by the reference bodies. Despite this, the government carried out the index increase at the turn of the year, which disappointed many.

The electricity tax is onerous and should really be reduced. In the absence of this, a canceled index increase is a good step.

Ministry of Finance: Dropped indexation of the energy tax on electricity (pdf)

5. Improved expert tax

The so-called expert tax is a reduction in income tax for foreign experts who are recruited to work in Sweden. According to the proposal, the level of monthly remuneration that the expert must have in the first year of employment in order to receive a share of the tax reduction would be reduced from 2 price base amounts to 1.5.

The purpose of the expert tax rules is to strengthen Swedish companies’ ability to attract highly qualified international labor. That these rules are made more competitive is positive.

At the same time, there is a government inquiry that will propose changes and improvements to the expert tax, which will present its proposals at the beginning of 2025. The proposal thus appears before this inquiry, which can be questioned (even if the proposal itself goes in the right direction). The introduction of the expert tax reduction is also an effect of Sweden’s high marginal taxes on wages, which shows why these need to be reduced.

Ministry of Finance: Proposal for a reduced compensation level for expert tax (pdf)

5. Reduced flight tax

Sustainable aviation boosts business

The flight tax is proposed to be halved, which means that the tax ends up between SEK 39 and 259 per trip, depending on the final destination.

Several measures that have been introduced since the aviation tax was added have aimed to reduce aviation’s climate impact, including a tightening of the EU’s emissions trading system (ETS). The flight tax is a strangely constructed environmental tax, which does not affect the emission itself, but the journey. It has therefore been criticized by environmental economists.

“Green” taxes should be designed in such a way that the cost of the emission’s damage is covered. If other political instruments raise the price of flying in parallel, the flight tax becomes more of an additional charge. The ongoing transition to emission-neutral and electric-powered aviation also makes the aviation tax even more difficult to justify.

Ministry of Finance: Reduced flight tax (pdf)

6. Permanently separated ceilings for root and root deductions

The root and square deduction will be increased in 2024

According to previous decisions, between July 1 and December 31 this year, the ceiling in the tax deduction will be temporarily raised to SEK 75,000, and the previous joint ceiling for tax and tax will be separated. This means that deductions for root do not affect the ceiling for root and vice versa.

Now the government is proposing that the separation of the roofs be made permanent. It’s a good change; The fact that the roofs are shared causes unnecessary hassle for those who use both deductions. A further change that would be welcome would be to raise the ceiling for root to SEK 75,000 even after the end of 2024.

Ministry of Finance: Proposal for continued separate caps for root and box deductions (pdf)

7. Increased amount limit for free compensation to athletes

The proposal means that the amount limit for free compensation to an athlete from a non-profit sports association is raised from half the price base amount to one price base amount. It is estimated to lead to lower costs for the associations concerned and that the administrative burden for these sports associations is reduced.

The proposal has no direct impact on company conditions or jobs, but reduced administrative burden is welcome.

Ministry of Finance: Proposal for increased amount limit for fee-free compensation to athletes (pdf)

8. Temporarily reduced tax on agricultural diesel

Full speed in the electrification of the transport sector

The government proposes an extended reduction in energy and carbon dioxide tax on diesel used in agricultural, forestry and aquaculture operations in 2025.

A reduction has applied in 2023 and 2024 and it is proposed to apply also in 2025, which corresponds to the EU’s minimum level. The purpose is to compensate for cost increases in the industries concerned in recent years. However, such targeted reductions in excise duties for certain industries can be questioned.

Ministry of Finance: Reduced tax on agricultural diesel in 2025