“This eases the burden on the households that have it the hardest,” she tells TT.
The government invests SEK 11 billion in a new employment tax deduction in the autumn budget. The tax cut is aimed at low- and middle-income earners who work full-time.
The overall details of the proposal are not yet known, but according to Finance Minister Elisabeth Svantesson, everyone who works will receive a tax cut regardless of scale.
The deduction rises for those with a salary of up to SEK 38,600 a month, and then it is more flat, she stated at this morning’s press conference.
“Hits Wide”
— The deduction seems to hit wide. Although everyone gets to take part in this, it is mainly aimed at low and middle income earners, which is wise given the tough economic situation, says Länsförsäkringar Chief Economist Alexandra Stråberg.
— Households’ wallets are thin considering the price increases we have.
Alexandra Stråberg emphasizes that the government’s scope for reform before the autumn budget is severely limited due to inflation.
“These are therefore reasonable priorities if the government claims to protect households’ strained finances, and especially for those who have it the hardest,” she says.
Shoka Åhrman, savings economist at SPP, welcomes the government’s announcement of a new employment tax deduction.
“It is reasonable for the government to implement a broad reform that means that many are covered, including pensioners. It is important from a socio-economic perspective that it pays to work, which promotes growth in the economy,” she says in a written comment.
“Many households are having a tough time financially as a result of the high inflation. It hits families with children particularly hard, who for some time now have had to live with high living costs in the form of higher interest costs, increased food prices and reduced real wages.”
“Sent the wrong signals”
The announcement about the employment tax deduction comes the day after the government announced a pause in the automatic increase of the cut-off point for state income tax of just over SEK 51,000.
Shoka Åhrman believes that it was a correct decision by the government to pause the increase.
“In this situation of high inflation, raising the cut-off point for state income tax would send the wrong signals and not help the households most in need of financial compensation.”
Alexandra Stråberg is on the same line.
— The change in the break point is perhaps not optimal – to change in a system where you have an automatic calculation of inflation. On the other hand, that’s not where the biggest problems are at the moment because those with low incomes tend to be more affected by inflation, she says.