Saturday, October 3, 2009

Taxes in Sweden

Taxes in Sweden!
Well there is always talk about how Sweden is a Socialist Country and there have been many references to this on American television such as The Daily Show, The Daily Show and more recently in the political sphere due to Obama's (intelliegent) plan to provide a certain minimum level of universal healthcare for all.

(translation of the article title to the left: 'Soon Sweden will have the highest marginal taxes in the entire world')

Firstly, let’s just say it, yes the rumours are true. Taxes are crazy high here. I am fortunate (or not) that I’m not earning above the marginal tax rate which next year will tax those who are at about 57%! Yes, it’s insane. If you look at the top 25 or so countries in the list above you will find that Canada and the US don’t even appear on the list. Here in Sweden they even tax the interest you earn on savings in your bank account at 30%. In Canada you are allowed a minimum of untaxed earnings from bank interest at about $200 or there abouts. The number one taxed country in the world used to be Denmark but as of next year they will lower their marginal tax rate and Sweden will raise theirs.
An interesting comparison of taxes and the differences between Sweden and the US for instance is that I can receive a package from the states for $12.95, if I were to mail this back to the states now the equivalent cost is $30.
Taxes for business are intentionally kept very low to promote people starting businesses in the country. There are several government funds to help entrepreneurs find the capital to get their ventures off the ground.
Food is taxed at 12.5 to 20 percent. Alcohol is taxed obscenely. A 5 minute cab ride that goes about 1.5 km will set you back about $20 CAD.
Are there any benefits to this high taxation?
Having lived here for 2 years, I for one can say that although money is not spent perfectly, you do see a lot of benefits (both direct and indirect) for your tax dollars. For instance, going to the doctor only costs you a marginal fee which caps out per year. This is similar to Canada except that in Canada your employer would cover your monthly health care costs at which point going to the doctor becomes free.
Besides the generous vacation that by default is 4 weeks per year (I receive 6 weeks at my job), you also receive a year off if you were to have a child in Sweden with the right to split that time between both parents if so desired.
Cities are clean and well looked after as the offentliga sektorn (public service sector) receives a bulk majority of tax dollars to ensure flowers are planted and cared for, parks are cleaned, and roads are kept in good condition. A negative consequence of this that I have seen is that some Swedes won’t even bother to clean up after themselves when leaving a park knowing that someone else will do it for them.
Not to mention that education is free and of good quality. In fact, children here even receive their lunches at school for free (or very low cost) up until they finish high school. These are healthy well rounded lunches which are a far cry from what was offered at my junior and senior high school which mainly consisted of pizza, fries and burgers and you had to pay for them yourself. I personally went through most of my education never even having lunch as my single mother worked to support my sister and I, and I was a lazy teenager that could care less if he went hungry and had nothing to eat until he came home.
No one is left behind, if for some reason you were to lose your job and require employment insurance, the government would cover your needs until you were able to find work again. I remember trying to apply for employment insurance in Canada, what a convoluted and confusing process that turned out to be with the end result that even though I was out of work, I was turned down.
I suppose one could say that Swedish life is cradle to grave in fact every year (unless you opt out) everyone in Sweden pays a burial fee to the church so that when it is time to move to the beyond, your final costs are covered.
There is opportunity to do whatever you would like in the country, study when you want, work when you want, or don’t work if you don’t feel up to it. But with all this freedom, it does not appear that Swedes take advantage of the system. People here have a good work ethic and strive for accomplishments, possibly why the economy has been a raging bull for the last several decades with several international firms locating themselves within Swedish borders.
What do Swedes think?
Even with all this tax, people don't complain, it’s almost as if they have been indoctrinated that this money will go for the public good. People here don’t believe in owning anything, knowing that the state will look after them and that owning something is just another expense. A huge majority of people use public transit (which is excellent throughout the country). Until fairly recently people here didn’t buy their flats, they just rented them from the state for their entire lives.
What do I think?
Personally, I’m not a huge user of the public system per say, yes when I first arrived here to Sweden it was to take a master’s program but since then, I don’t really get sick so no doctors visits, with a couple months left in the year I have not taken my allotted 6 weeks of vacation (I have managed to take 1.5 so far - Saving vacation is a Canadian habit that’s hard to break). I’m making less than I did in Canada and paying more tax on what I do earn but I have to say I LIKE IT. Sweden is excellent and sets a good example for the rest of the world. In terms of taxation, Canada could learn a thing or two about how Sweden does it and improve their systems.

The Swedish Word of the Day is: Skattefusk and it means tax evasion.

1 comment:

  1. Do you think Jonas Jonasson, author of "Hundraåringen som klev ut genom fönstret och försvann" evades the Swedish tax?