Debate over flat tax

Politics | 2007-08-07

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The youth organisation of the Centre party has proposed that Sweden should introduce a flat tax, meaning that the tax would be a fix percentage irrespective of level of income. The Centre party has however turned down the idea, implying that is has no support among the public and that people with low income would loose from it. The Centre party is one of the four parties in the government.

The local taxes within each municipality are already flat. It differs however between the municipalities. People who earn more than 28 000 SEK pays a state tax in addition to the local tax. The state tax is progressive and on really high income there is an additional tax, called värnskatt. The liberal criticism against värnskatten and the progressive state tax in general has been that it harms economical growth and creation of new jobs. The left has argued that this is not proven and that it is a matter of fairness that the rich contribute relatively more to the welfare system.

Estonia was the first country in Europe to introduce a totally flat tax system in 1994. Among the Nordic countries only Iceland has followed.


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