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Swedish government to boost spending on jobs, welfare if reelected
September 1, 2014 / 10:47 AM / 3 years ago

Swedish government to boost spending on jobs, welfare if reelected

STOCKHOLM (Reuters) - Sweden’s centre-right government said it would spend more than 9 billion Swedish crowns (0.78 billion pounds) next year to improve schools, welfare and create jobs if it bucks the polls and is reelected on Sept. 14.

Both the Alliance government coalition and the opposition of the Social Democrats, Greens and Left parties - which lead by around 7 percentage points in the latest opinion survey - have promised additional spending to get more people into work, lower class sizes in schools and cut hospital waiting times.

Both have also said spending must be balanced with prudence and improving Sweden’s already strong public finances.

The ruling four-party coalition - which has cut taxes by more than 130 billion crowns over the last 8 years - said new spending measures would cost 9.3 billion crowns in 2015 rising to 13.3 billion in 2018.

However, this will be more than offset by revenue generating measures, such as higher vehicle taxes and cuts in tax breaks on pension savings. This should raise an additional 10.4 billion crowns next year, rising to 14.7 billion in four years’ time.

“Paramount for us is to take responsibility for the economy and public finances,” Prime Minister Fredrik Reinfeldt told reporters at the launch of the centre-right government’s election manifesto.

“That’s why we have promised that there will be no unfinanced tax cuts during the next government term.”

The government has already said that it needs an additional 25 billion Swedish crowns to reach a target of a one percent surplus in public finances in 2018.

The four-party government repeated it planned to raise taxes on the financial sector and commercial property and increase some environmental taxes. Alcohol and tobacco will cost more.

Those measures are likely to come in 2017 and 2018 as the economy remains fragile 6 years after the global credit crunch.

The Social Democrats, the biggest opposition party, have outlined around 60 billion crowns of spending measures over the next 4 years. They plan tax hikes similar to those proposed by the government.

In addition, they will reverse a final round of in-work tax credits introduced in 2014 for top wage earners with monthly incomes of over 60,000 crowns($8,570), roll back tax breaks for companies employing people under 26 and rescind a cut in VAT on restaurant meals.

Reporting by Daniel Dickson and Johan Sennero

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