Abolished property tax and introduced property tax
The property tax was abolished in 2008. Until then, the property tax was 1 percent of the tax value.
The property tax was replaced by a municipal property fee of 0.75% of the tax value with a maximum ceiling. This ceiling has increased successively and was SEK 7,812 a year in 2018.
According to Statistics Sweden's estimate, the change favored primarily municipalities in metropolitan areas with a relatively large proportion of high-income earners. This is also confirmed by a previous review by the Swedish Financial Management Agency. For example, the change meant tax relief for some homeowners in Danderyd and Lidingö by SEK 30,000-40,000 per year thanks to the ceiling.
Less favored were mainly municipalities in rural areas where taxation values rose relatively quickly from low levels. As a result, the rural municipalities pay a larger percentage of the total property fee compared to the proportion when Sweden had property tax.
The earned income tax
The job tax deduction was introduced in 2007 and has since been increased in installments, 2008, 2009, 2014 and 2019. At one point, in 2016, it was reduced and then for income over SEK 600,000 per year.
The job tax deduction is a tax reduction. It reduces the tax on income from employment and active business activities. However, this does not affect the tax on pensions and benefits from social insurance such as sickness benefit, parental benefit and unemployment insurance.
The job tax deduction is designed so that people with low incomes earn a percentage on the system. Up to a monthly income of approximately SEK 31,000, the job tax deduction increases to a maximum of approximately SEK 2,500 per month. For monthly incomes of more than SEK 52,000, the job tax deduction begins to be stepped down to completely cease at monthly income of approximately SEK 137,000.
Thus, financially, the job tax deduction has favored municipalities with a high proportion of low- and middle-income earners, while municipalities with many high-income earners did not gain as much from the tax relief.
Raising the breaking point for state tax
State tax is levied on income exceeding two amounts, so-called layer boundaries. At the lower limit, 20 percent state tax is imposed and at the upper limit another five percent is imposed, also called VAT. (Protection tax is proposed to be abolished on 1 January 2020)
For the 2019 income year, the lower boundary limit was increased from SEK 455,300 in taxable income to 490,700 and the upper was increased from SEK 662,300 to 689,300 (the boundary limits apply to those who have not reached the age of 65. For other persons, other limits apply). This means that state tax begins to be levied at a monthly salary of about SEK 42,000 and withholding tax becomes a reality when monthly income exceeds about SEK 58,600.
Generally, the increase in the breaking point favors municipalities with a high proportion of high-income earners.
Abolished withholding tax
From January 1, 2020, it is proposed that the so-called protection tax be abolished. This means that the second limit for state tax surcharges is removed. Today, 20 percent of the state tax is paid on income over SEK 490,700 and an additional five percent on income over 689,300. The upper limit is removed and from the end of the year 2019/20 the state tax will be at most 20 percent.
The change clearly benefits those municipalities that have a relatively large proportion of people with the highest incomes.
Abolished wealth tax
The wealth tax was abolished in 2007. The wealth tax was calculated each year-end on a person's or a couple's total wealth. The total value of assets was calculated as assets, for example, bank accounts, shares, real estate, vehicles and other private property. The tax rate was when it was abolished 1.5 percent on assets over SEK 1.5 million for single and 3 million for married and cohabiting couples.
The wealth tax was criticized for containing loopholes. For example, the tax did not include agricultural and forestry properties and certain types of antiques did not need to be recognized at full market value.
In general, the abolition of wealth tax mainly favored metropolitan municipalities with a relatively high proportion of high-income earners.
Reduced tax on pensions
For Swedish pensioners, the tax has been lowered in different ways in different ways. In 2009, a tax relief was introduced where the basic deduction of income for people over 66 years was increased. This has since been further increased over the years.
In 2016, the tax was lowered again for people over 66 years. At the time, it was designed so that people with low pensions received a percentage higher reduction. At that time, they mainly applied to pensioners who had an income of SEK 120,000 a year.
In 2018, a further reduction of the tax was implemented for the age group, mainly aimed at those with a medium pension, ie those who received SEK 204,000 a year.
This year, 2019, the tax on pension was further reduced. All people of retirement age received tax reductions, but the largest reduction was those with medium to high pensions, according to the Swedish Pensions Agency.