Sweden Announces Income Tax Cuts to Boost Jobs

Part of overall tax reduction program to stimulate employment

Sweden announced income tax cuts of 15 billion kronor (US$2.21 billion) in a bid to stimulate the job market, one of its primary objectives.

The proposal, to be presented to parliament on Sept. 22 as part of the 2009 budget bill, is the third leg of a tax cut program introduced in January 2007 to stimulate employment. "Together with the first two legs, this means that about 97% of full-time workers will now benefit from tax cuts of more than 1,000 kronor a month, compared to 2006," the government said.

Last week the government announced a separate 16 billion kronor (US$2.4 billion) package aimed at improving the business climate, which would in turn help increase employment. That package included proposals to cut the corporate tax rate from 28% to 26.3% in 2009 and a reduction of social contribution fees paid by employers by around one percentage point.

Since coming to power in the autumn of 2006, the Swedish government has launched a series of measures aimed at inciting Swedes to return to the job market instead of living off of state subsidies.

Sweden's unemployment rate in August was 5.2%, compared to 4.8% in the same month a year ago, according to official statistics.

Copyright Agence France-Presse, 2008

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