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Swedish Tax Authority joins critics of financial tax proposal
February 14, 2017 / 8:36 AM / 8 months ago

Swedish Tax Authority joins critics of financial tax proposal

STOCKHOLM, Feb 14 (Reuters) - The Swedish Tax Authority has joined the opponents of a proposed tax on financial services, saying it would hit many more companies than intended and add to their regulatory burden, it said in a written statement to the finance ministry.

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

But critics say a tax would hit the country’s financial services industry, which is a major contributor to the economy and could push some financial firms to move jobs abroad.

The Tax Authority said the proposal would hit over 300,000 companies, far more than the around 10,000 registered financial firms, and would affect many companies not under-taxed.

Under the proposal, all companies that have revenues from financial services would be subject to the new tax, including retail companies such as car dealerships offering payment plans on cars.

The Tax Authority called for several adjustments limiting the scope of the proposal, should the government go ahead with it.

“It seems unreasonable that a tax aimed at reducing a tax advantage for the financial sector would affect almost 300,000 firms which are not operating in the sector,” the Tax Authority wrote in an e-mail to the finance ministry seen by Reuters via the freedom of information act.

“In many cases, state tax revenues would not be proportionate to the administrative burden the tax would mean for businesses,” it said.

The Tax Authority joins the competition watchdog in rejecting the tax proposal and the central bank has also questioned it.

It has also drawn criticism from the financial sector, which has said it could push the banking sector that includes Nordea , Handelsbanken, Swedbank and SEB to move more jobs abroad.

A government-appointed commission in November proposed the 15 percent payroll tax for financial services, which it said would raise as much as 7 billion Swedish crowns ($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 plan has faced criticism from centre-right opposition parties, but the government can attach it to the budget bill which means it would be likely to pass in parliament. (Reporting by Johan Ahlander. Editing by Jane Merriman)

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