2017 Autumn Budget Bill
In this autumn budget, the government presents a series of proposals that affect our private economy. Some of the groups who gain from this budget are retirees, families with children, students and those living on sickness compensation or activity compensation. At the same time, the tax on savings (investment savings account), air travel and gasoline is raised to name a few. The proposed increase of the ISK account has received a lot of negative attention, mainly for the political signal it sends about savings, which I fully agree with. It is nevertheless important to point out that even after the tax increase, the ISK account is still a very advantageous savings form.
The government’s autumn budget also proposes major investments in schools, jobs, the environment, customs, defense and police.
This year, the government has finally come to address the retirees’ finances. Three proposals will give the retirees more money to live each month. It can amount to up to SEK 880 for a single retired person.
• Increased housing supplement – 290,000 pensioners can look forward to an increased housing supplement. The ceiling for the housing allowance will, according to the proposal, be raised from SEK 5,000 to SEK 5,600 for those who are unmarried and SEK 2,800 for married couples. If the housing cost is below SEK 5,000, the replacement rate will be increased to 96% from today’s 93%. It can give up to SEK 470 more per month.
• Increased special housing supplement – These benefits are raised correspondingly to the housing supplement. The reasonable housing cost is raised to 6,620 SEK per month as unmarried and 3 310 for married couples. At the same time, the reasonable living level is raised to approximately SEK 590.
• Reduced tax – From 1 January 2018, the tax will be reduced for 75% of all people over the age of 65. The tax gap between pensioners and wage earners is completely eliminated for retirees with a pension of up to SEK 17,000 who can now receive up to SEK 410 more every month. Even pensioners with income of up to SEK 35,000 will receive a tax reduction according to the proposal.
Persons with sickness or activity compensation
340,000 people are estimated to receive sickness compensation or activity compensation. The government submits several proposals to reduce the difference in the economic standard between this group and wage earners. The proposals can give up to SEK 840 more every month to a single person with guarantee benefit.
• Increased housing supplement and special housing supplement – The supplements are increased by as much as SEK 470 per month, corresponding to the increase for retirees, from January 1, 2018.
• Reduced tax – The tax is estimated to be approximately SEK 1,600 lower per year for people who are 30 years old and who have full sickness compensation at the guarantee level. Those who have the highest possible compensations already, are estimated to get their taxes reduced by approximately 2 500 kronor per year from January 1, 2018.
• Elevation of guarantee benefit – An increase of more than SEK 300 is expected to apply from 1 July 2018.
Even the students get a little more to live on. A welcome increase, given that the average student is SEK 326 short every month according to the Student Unions calculation of Student Budget for 2017.
• Increase in student finance – Students’ finances is strengthened by increasing the student grant by approximately SEK 300. In total, students now should receive SEK 11,300 per month if they study full-time.
• Student Loans for driving license – In 2018, long-term unemployed people get the opportunity to get student loan for B-driving licenses at approved traffic schools. By 2019, the government will extend the possibility to younger people (19-20 years) who completed a secondary education. This is not a concrete measure that provides more money right away, but indirectly allows young and unemployed to be able to obtain a driver’s license and be more accessible to the labor market, which in the long run may also affect their economy.
Families with children
All families will receive increased child support. In addition, single parents will receive an additional supplement to the economy in the form of increased maintenance support. Furthermore, two proposals are presented that facilitate the family economy.
• Increased maintenance support – Single parents of children over the age of 11 are suggested to receive an additional supplement in the form of SEK 150 extra per month, giving a total of SEK 1 723 per child per month. Parents of children over the age of 15 are suggested to receive SEK 300 extra per month, which sums up to SEK 2,073 per child per month. The proposal does not say when these changes will apply.
• Increased child support and study grants – Both contributions are raised by SEK 200 to SEK 1250.
• Free public transport during the summer – Families with children aged 6-9 in primary and secondary school and those studying first and second year in high school can look forward to free-of-charge public transport during the summer holidays. This proposal makes it easier for families with strenuous economies and also encourages schoolchildren to summer work.
• Free holiday activities – This support goes to the municipalities and will enable all children, regardless of the parents’ finances, to have something meaningful to do during the holidays. The funds will be distributed by the County Administrative Board to the applicant municipalities and target children between 6-15 years. In total, the government proposes to allocate SEK 250 million per year to the municipalities over the next three years.
• Safer unemployment insurance fund- The number of qualifying days for the unemployment insurance is proposed to decrease from seven to six days for someone who gets unemployed. This means that someone who becomes unemployed can receive compensation from their unemployment insurance fund one day earlier than what is established today, hopefully reducing the economic strain slightly.
• Tax deduction for trade union fees – To increase the number of members in the trade union, the government proposes a tax reduction of 25% of the membership fee, if the fee is 400 kronor or higher per year. The proposal will apply from 1 July 2018.
For all of us
• Increased dental care contribution – A doubling of the dental care contribution means that the contribution is increased from SEK300 to 600 per year for young adults between 22 and 29 and those aged 65 or older. For us who are between the ages of 30 and 64, the contribution is raised from 150 to 300 kronor per year. This is proposed to apply from April 15, 2018.
• Free cervical cancer screening – Cervical cancer screening, with gynecological cell sampling, will be free from 2018.
• Bonus for new cars with low emissions – The five-year tax exemption for new cars will be removed and instead a new bonus will be introduced replacing today’s super-environment car premium of 40,000. At most, you can get SEK 60,000 in bonuses for zero-emission cars and at least 10,000 kronor for cars that release 60 grams carbon dioxide per kilometer. Gas cars receive a bonus of SEK 10,000. The proposal applies to all cars sold after July 1, 2018.
• Solar Investment Support – If you are considering setting up solar cells on the roof, you can now get 30% of the investment cost in support. Today, the aid is 20%. Costs that are eligible for support are project management, materials and work. More information about support for solar investments can be found at the Swedish Energy Agency.
• Electric vehicle premium – As part of the climate initiative, the government proposes an electric vehicle premium for the purchase of electric bicycle or electric motorcycle. There will be a 25% deduction of the prize up to a maximum of 10,000 kronor per vehicle. The idea is that we will reduce car travel and, to a greater extent, choose electric vehicles.
• Reduced VAT on guided tours in the nature – It will be cheaper to go on a guided tour in the nature. The purpose of the proposal is to increase the possibility of pursuing natural tourism by reducing the value added tax to 6% and thereby increasing accessibility to different natural areas. The lower VAT rate then corresponds to the same level tax rate as to entrée to concerts, circus, theater, opera or ballet performances or other comparative performances, as well as access to and exhibition of zoos.
• Increased tax on ISK account and capital insurance – The tax rate on an ISK account and on capital insurance is ruled by the government loan rate with a surcharge of 0.75 percentage points. The government proposes to increase the allowance by 0.25 percentage points to 1 percentage. For the average amount of savings, it means approximately SEK 60 more in tax per year. The ISK account was introduced in 2012, with the purpose of simplifying savers to buy, sell and exchange stocks and funds and be an alternative to more expensive and more difficult fund accounts.
• Increased tax for new cars with high emissions – For new cars with high carbon emissions, a penalty will be imposed, malus, in the first three years. For carbon dioxide emissions, a tax is charged of SEK 82 per gram carbon dioxide between 95 and 140 grams per kilometer. Over 140 grams the tax is 107 kronor per gram. From and over four years the tax is 22 kronor per gram over 111 grams, the same as before. The proposal applies to all cars sold after July 1, 2018.
• Taxation of e-cigarettes – The government proposes an extra duty on e-cigarettes. The expected amount of duty is uncertain however is the new taxation is expected to apply from 1 July 2018.
• Tax surcharge for own-initiative corrections – The idea is that a tax surcharge, a fee, will be charged for corrections that are made after the Swedish Tax Agency has announced general control actions. This means that if the Swedish Tax Agency would announce that they are about to make general checks on a specific transaction and you send a correction related to that transaction after the message has been sent, the Tax Agency may demand a tax surcharge. The size of the tax surcharge has not yet been specified. The proposal will take effect starting 1 August 2018.
• Air tax – A tax that means that airline tickets will be 60, 250 or 400 SEK more expensive. The tax will be charged at different levels depends on whether the destination is located in Europe or outside Europe, and if the distance is shorter or longer than 6,000 kilometers from Arlanda Airport. This debated proposal has been modified and tax rates have been reduced for all distances by between SEK 20 and 30. According to the proposal, which will apply from April 1, 2018, the amounts will be recalculated every calendar year and follow the consumer price index.
• Increase in special income tax for foreign residents – The special income tax for foreign residents will, according to the proposal, be increased from 20 to 25 percent and will begin on January 1, 2018 and apply to earnings accrued after 31 December 2017.
• Increase in fuel taxes – This is not included in the autumn budget, as the government introduced a new index model for the taxation of fuel taxes as of this year. In short, the model is based on the fact that the tax is increased automatically and without a parliamentary decision annually, according to inflation plus two percentage points to reflect the real income growth of the economy. This means that the tax will increase at a faster pace than before.