November 15, 2018 / 8:02 AM / 25 days ago

UPDATE 1-Swedish caretaker govt cuts pensioner taxes in autumn budget

* Caretaker govt has limited room for measures

* Budget an extension of 2018 spending plans

* Cross-party agreement to cut pensioner tax

* (Adds Deputy Fin Min comment, background)

STOCKHOLM, Nov 15 (Reuters) - Sweden’s caretaker government said next year’s budget would include a cut in taxes for pensioners but that 2019 spending plans, presented on Thursday, would likely undergo changes when a new administration takes office.

Voters delivered a hung parliament in September and neither there centre-left bloc nor the centre-right, four-party Alliance has yet been able to form a new government.

The 2019 budget is broadly an extension of 2018’s spending plans with some automatic adjustments.

“This budget should not be seen as the final product for 2019 as a new government will want to put its stamp (on fiscal policy) after it has taken over,” Deputy Finance Minister Per Bolund said in a statement.

However, all parties agreed to lower taxes for those over 65, a measure which will cost 4.2 billion Swedish crowns ($463.80 million) annually from 2019, the government said.

Prime Minister Stefan Lofven’s centre-left government had previously promised more money for local authorities and extra spending on welfare, schools and the military, but those measures will have to wait.

A new administration can boost spending as soon as it takes over, but it will not be able to do anything about income taxes - a major blow to parties in the centre-right Alliance who had promised cuts.

Income taxes can only be cut or raised in the autumn budget, coming into effect at the start of the next calendar year.

The caretaker government saw growth this year at 2.5 percent, slightly lower than its previous forecast of 2.9 percent.

GRAPHIC - Election scenarios: tmsnrt.rs/2p45tJh ($1 = 9.0557 Swedish crowns)

Reporting by Stockholm Newsroom Editing by Adrian Croft and Raissa Kasolowsky

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