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Swedish central bank raises questions over financial tax proposal
February 10, 2017 / 4:57 PM / 8 months ago

Swedish central bank raises questions over financial tax proposal

The sign for Sweden's central bank is pictured in Stockholm, Sweden, August 12, 2016. Picture taken August 12, 2016. REUTERS/Violette Goarant

STOCKHOLM (Reuters) - Sweden’s central bank raised questions on Friday over a proposal to add an additional payroll tax on financial services, saying the effects were hard to predict and that it could hamper the ability to supervise the financial sector.

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.

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 crowns (636 million pounds) a year for state coffers.

The Riksbank said it supports the aim to achieve tax neutrality with an additional payroll tax on financial services but said the potential effects were hard to predict. Critics say banks could skirt the tax by outsourcing jobs abroad.

“There may be grounds to combine a possible implementation of the proposal with a plan for monitoring and evaluation of its effects,” the Riksbank said in a written statement to the finance ministry signed by board members and obtained by Reuters under the freedom of information act.

It also said it was vital to ensure that the Financial Supervisory Authority’s ability to conduct oversight was not affected by outsourcing of financial activities abroad.

“It is possible that the proposal could lead to supervision over the financial activity important for Sweden is hampered,” it said.

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 likely pass in parliament.

It has also drawn criticism from the financial sector, which has said it would lead a banking sector that includes Nordea (NDA.ST), Handelsbanken (SHBa.ST), Swedbank (SWEDa.ST) and SEB (SEBa.ST) to move more jobs abroad.

Reporting by Johan Ahlander; Editing by Alistair Scrutton

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