Sweden: Competition watchdog opposes proposed financial tax

Sweden’s competition watchdog has come out against a proposed tax on labor, saying it would hit their ability to compete internationally and skew the domestic market.

The opinion, published on the watchdog’s website, was sent to the finance ministry, which is consulting on the proposal that could be introduced in the autumn budget.

Sweden’s centre-left minority government has long sought to impose on labor tax, saying the sector – which is exempt from value-added tax – should pay more to the state.

Critics, however, say a tax would be a heavy blow on a major contributor to the Swedish economy and could speed up a drive among some financial firms to move jobs abroad to take advantage of cheaper labour.

A government-appointed commission proposed in November an additional 15 percent payroll tax for the financial services sector, a move it said would raise as much as 7 billion Swedish krona ($795 million) a year for state coffers.

The proposal, which has yet to be turned into a government bill, is going through a three month consultation process before the government decides whether to press ahead.

“The Swedish Competition Authority considers that the proposal entails a competitive disadvantage for the Swedish financial services sector in relation to financial companies in other countries,” it wrote to the finance ministry.

The authority said the proposal would also lead to more red tape, which could particularly hinder smaller financial firms.

Full Content: Reuters

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