In recent years, a number of tax cuts have been implemented in Sweden. Statistics from Statistics Sweden and SVT show that there is a trend where people living in some municipalities benefit more from tax reform than others.

SVT has taken a closer look at five tax cuts that have been implemented in recent years and will come into force in 2020. These are the abolished wealth tax, the replaced property tax, the job tax deduction, the abolished protection tax and the increased limit for state tax.

Difference between city and countryside

The statistics show a difference between residents in municipalities that are close to major cities and municipalities located in rural areas. Of the tax cuts, most have benefited municipalities on the west coast and around Stockholm. Kungsbacka, Öckerö, and Knivsta are among the municipalities where the residents benefited most from all five tax cuts.

At the same time, the inhabitants of the municipalities of Haparanda and Ljusnarsberg are among those who benefited least from all five tax cuts, together with Eda and Filipstad.

“More affluent in the big city”

- Overall, people with high incomes and large assets live to a greater extent in metropolitan areas. That's why people in metropolitan areas benefit more from tax cuts on high incomes and capital, says Spencer Bastani, associate professor of economics at Linnaeus University.

As an example, only one percent in the municipality of Filipstad is favored by the scrapped tax on taxes. In Kungsbacka municipality, that figure is 10.7 percent.

In Danderyds municipality, the property tax was lowered when it became an average of SEK 4,209 per inhabitant. The corresponding figure in Haparanda municipality was SEK 206 per inhabitant.

- If we take the municipal property fee as an example, the tax is not proportional to the value of the property. Therefore, rural homeowners often pay just as much property tax as homeowners in the big cities, even though their properties are much lower valued, says Spencer Bastani.

At the same time, he emphasizes that reductions in vehicle-related taxes have the opposite effect, and benefits the countryside to a greater extent, where the need to travel by car is greater because of, for example, less developed public transport.

Spencer Bastani, associate professor of Economics at Linnaeus University. Photo: Linnaeus University / Press image

Complicating factors

It is unclear how serious it is for the municipalities whose residents have benefited least from the tax cuts.

- A complicating factor is the municipal equalization system. There, money goes from wealthier municipalities such as Stockholm to poorer municipalities in the countryside, but resources are also redistributed to certain metropolitan municipalities, such as Malmö. The equalization means that rural residents can avoid certain municipal tax increases that would otherwise have been implemented if the equalization system did not exist, for example, says Spencer Bastani.