The favourites to win next month’s general election in Sweden are planning to reverse course on the current government’s economic reforms by limiting private equity involvement in the public sector, raising taxes and boosting spending. Sweden’s centre-right government, in power since 2006, has gained a reputation for tax cutting and increasing competition in the public sector, which has proved popular with business but voters appear ready for a change as polling data suggests they are more concerned about education, jobs, health, and elderly care. “The conflict is clearly what direction is Sweden going to take during the next 8-10 years?” Magdalena Andersson, a Social Democrat and likely finance minister in a centre-left government, told the Financial Times. “Our path is to increase taxes right now, so we can do some very necessary spending now, but also in the future we don’t see a need for further tax cuts, but rather for more investment in the public sector.” With five weeks to go until polling day the opposition parties of the left have a healthy lead over the ruling centre-right coalition.
In response to a slide in support in the polls, finance minister Anders Borg has responded by promising modest tax rises to help eliminate the Nordic country’s budget deficit. Mr Borg contrasts the centre-right’s proposed small increases of taxes on alcohol, tobacco and cars with what he called “huge increases” put forward by the centre-left.
The tax debate is just one element in a bigger argument about the future of the economy, which has become a significant theme of the election campaign.
The centre-right like to point to the fact that Sweden has enjoyed faster economic growth than the US and nearly all European countries, while its employment rate is the highest in the EU. But the centre-left counters that unemployment has remained stubbornly high at 8 per cent ever since the financial crisis while a budget deficit of 1.1 per cent last year – while modest by European standards – is the biggest since 2002 in Sweden.
Full Article: Election exposes deep divisions in Sweden – FT.com.