Making Sweden rich again
- Stop giving away Swedes' tax money.
Deteriorating economic development
Sweden has had a weak economic performance for many years. GDP growth has been far below our historical figures. In terms of GDP per capita, growth in welfare is extremely modest because our population has increased sharply, but without a corresponding increase in GDP. This is because Sweden currently has a mixed economy, and too large a proportion of this economy is now managed as a planned economy.
In the 1970s, Swedes were one of the richest people in the world, on a par with Switzerland in terms of wealth. Today, an experienced Swedish secondary school teacher earns around SEK 40 000 per month, while a Swiss teacher receives the equivalent of SEK 150 000. Given that Switzerland has lower taxes but higher prices, the Swiss teacher receives just over four times as much purchasing power as the Swede for the same working hours. In the 1970s, a Swedish worker could support a family on one salary. Today, few can afford such a luxury. Why did we become poorer and how did the Swiss become four times richer than us in 50 years?
One reason for the weak development is that the Swedish public sector has expanded. Increased bureaucracy results in lower productivity. One problem with the public sector is the lack of both competition and entrepreneurship. It is important to make public expenditure more efficient. This requires firm discipline and clear priorities throughout the public sector.
Sweden has a generally favourable business climate, with strong innovative capacity and a good culture of creative entrepreneurship. At the same time, businesses, both large and small, are burdened by growing regulations and burdens from the EU.
A Poor Nation Becomes Rich Through Economic Growth
The natural state of mankind is poverty and hunger, hunting and gathering what little nature offers. How could we lift ourselves out of this sad state? Through economic growth. The concept of economic growth means producing more with the same input - creating added value.
It is not working time rules per se that have given us weekends and holidays off. It is not compulsory schooling that has allowed us to afford to spare children's labour in agriculture. It is economic growth. Growth is created by the sum of people's productive endeavours and is driven by the availability of cheap and reliable energy, competition and entrepreneurship.
High taxes stifle economic growth
People who add value to society should be rewarded, through fair wages and other remuneration. It should be worthwhile to work. If it does not pay to work, the willingness to work decreases.
Say 90 per cent of the farmer's harvest is confiscated in taxes. That makes him poorer. But it also reduces his willingness to invest, which makes the rest of us poorer too. Why bother if you don't get to keep the results? You'd rather do something else with your time.
High taxes stifle the willingness to invest for economic growth. But high taxes also mean that money is shifted from a market economy to a planned economy. A planned economy means that the government takes most of your wage income and decides what your earned money is spent on, instead of you deciding for yourself.
All experience shows that planned economy systems tend to produce a strong growth of bureaucracy. The more bureaucracy, the more a country's economy stagnates because bureaucracy creates minimal added value for society.
The public sector must not grow unrestrained
In Sweden, almost 50 per cent of the country's GDP is consumed by the public sector, compared with 30 per cent in Switzerland. In Sweden, the public sector accounts for more than 30 per cent of the total workforce, while in Switzerland it is only 15 per cent. This is a major reason why we have fallen behind.
The public sector should focus on the country's core tasks: defence against external and internal enemies, health, education, justice, infrastructure, social safety net and business management.
Reducing the number of authorities and cutting costs
Sweden currently has 367 government agencies. That is far too many. The public sector's core activities must be prioritised, but today many government agencies are engaged in tasks that either overlap with others - or are not necessary. There is therefore a lot of scope to both reduce the number of agencies and cut costs.
A significant proportion of these authorities could be dismantled altogether, while others should be merged. Those that remain should be subject to clear efficiency and savings requirements. Technological developments in IT and AI make it possible to carry out government work more cost-effectively than ever before.
For example, the National Institute of Economic Research, the Swedish Agency for Economic and Regional Growth and Growth Analysis could be brought together in a joint organisation. Similarly, the Swedish Export Credit Corporation, the Swedish Export Council and Business Sweden could be merged and streamlined. For authorities that are not structurally affected, savings requirements of at least ten per cent should be introduced as a first step.
Ambition Sverige wants to halve both the number of authorities and their costs. At the same time, a general efficiency requirement will be introduced for those authorities that are still deemed to have a necessary function. The central government will focus on its core tasks - not grow on its own.
The economy can be repaired quickly
Sweden could become rich again in a short time. This does not require politicians doing smart things with the economy to ”create growth and jobs”. On the contrary, it requires politicians to step out of the rut and allow individuals and businesses more room to create wealth. The more deregulated society becomes, the greater the creativity, the desire to work and the prosperity. The greater the prosperity, the better the wage growth and consequently the higher the pensions.
Reduce the tax burden to the industrialised countries' (OECD) average
Today, the tax burden in Sweden is about 42.8% and the average tax burden in OECD countries is 33.9%. During the period up to the mid-1960s when Sweden had the highest average growth in the world and became one of the world's richest countries, the tax burden never exceeded 30%. Ambitions Sweden's intention is to reduce the Swedish tax burden towards the OECD average. This will shift economic resources from command economy management to market management. This will boost economic growth in Sweden. It has been done before and it can be done again.
Abolish the state income tax
It should pay to work and it should pay better to work even more. Reduced tax pressure provides room for increased creativity and economic growth. That is why we want to abolish the state income tax of 20%, which applies to monthly incomes above SEK 51,200. Income tax will then be levied at the municipal tax rate. The tax revenue from the central government income tax amounts to approximately SEK 54 billion.
Ambition Sverige wants to phase out the state income tax in stages over a few years until it is completely eliminated.
Increase the basic allowance
By increasing the basic deduction, we want to increase the part of income that is not taxed at all. This affects local taxation and means that people on low incomes get to keep more of their money. It also benefits our pensioners who, after a lifetime of hard work, often have to live on a meagre pension.
Increasing the basic deduction directly contributes to reducing the tax burden and makes it more profitable to move from benefits to work. Sweden currently has a basic deduction that amounts to a maximum of SEK 49,400. In comparison, Germany has a basic allowance of EUR 11 784 (equivalent to about SEK 130 000) and Norway about NOK 88 000 (2024).
Ambition Sverige wants to increase the basic deduction so that it is comparable to the level of the subsistence minimum. The subsistence minimum consists of the sum of a reservation amount and the cost of housing. For a single person in 2025, this would be SEK 6,186 plus rent of around SEK 6,500, i.e. around SEK 12,600/month or around SEK 150,000 per year.
To simplify the calculations around such an increased basic deduction, one can use the price base amount (PBB) that is determined each year. For 2025, the PBB is SEK 58,800. Doubling the PBB would amount to SEK 117,600, which is a reasonable level to set the basic deduction at.
Ambition Sverige believes that the basic deduction for both earned income and pensions should be increased to twice the price base amount, which for 2025 would amount to SEK 117,600.
Reducing sick pay liability for small businesses
In Sweden, employers are fully responsible for sick staff during the first 14 days of sick leave, apart from a qualifying day. For small companies, this is a very big financial risk. Suppose a company with 4 employees has two people who are repeatedly absent due to illness. The company will then have to pay both sick pay for the sick people and salaries for extra staff, which will result in significant costs for the small company. If the firm cannot afford to bring in a replacement when absent due to illness, production is reduced. One option is for the firm to be very restrictive about employing people who have the slightest sign of illness risk. Sick pay liability thus becomes a clear burden for small businesses and can seriously hamper their ability to survive and grow.
Ambition Sverige believes that the responsibility for sick pay for companies with fewer than ten employees should be changed. The company should only be responsible for day two of sickness, while the state takes over the cost responsibility from day three.
Reduced VAT on food
The government currently has three VAT levels: 25%, 12% and 6%. VAT on foodstuffs amounts to 12%, which annually provides the state treasury with approximately SEK 25-35 billion. Reducing VAT on food to 6% provides a relative economic improvement, especially for low-income earners, while reducing the overall tax burden.
There is also added administrative value in reducing the number of VAT rates from three to two, i.e. less bureaucracy to deal with.
Ambition Sverige wants to reduce VAT on food from 12% to 6%. We want to remove the VAT rate 12% completely, so that the VAT on restaurants, hotels and catering is also reduced to 6%. The result will be a simpler tax system, a lower cost of living and better conditions for jobs in the food and service sectors. The total reduction in tax revenue will then be around SEK 40-45 billion if no account is taken of positive effects from increased consumption of food, hotels, restaurants and catering (so-called dynamic effects).
Introduce benefit caps
Prosperity in the country is a result of companies and employees producing goods and services that in turn generate tax revenue. Ambition Sverige wants it to pay off to work, so it should not be possible to ”earn” as much from receiving benefits as from working.
Today, beneficiaries can stack benefits on top of each other, making it impossible to take a job without loss. This should not be the case. Examples of benefits that can be stacked are income support, housing allowance, housing supplement, maintenance support, activity compensation and unemployment benefit. For example, a single person with 2 children can receive income support of SEK 9,000, housing allowance of SEK 4,500, housing supplement of SEK 4,500, maintenance support of around SEK 3,000 and child benefit of SEK 2,500, provided that the requirements of the Social Insurance Agency are met. This means a total allowance of SEK 23,500/month after tax, which corresponds to almost SEK 35,000/month before tax. It would be almost impossible to motivate such a person to move from benefits to work.
A benefit ceiling of 50 % of the price base amount (for 2025: SEK 29,400) before tax should be introduced. The Tidö parties' proposal for a benefit cap, which certainly reduces benefits, still gives some families up to SEK 38,000 per month after tax.
Ambition Sverige believes that a benefit ceiling should be introduced so that a maximum of half a price base amount before tax is paid to benefit recipients and that a work effort should be required of the recipient.
Ambition Sverige will work for:
- phasing out the state income tax through a gradual process over a few years.
- Increasing the basic deduction for both earned income and pension so that it corresponds to twice the price base amount, which for 2025 would be SEK 117,600.
- Abolishing the general payroll tax for company employees numbered 2-6 and gradually removing it for all employees.
- Reduce VAT on food to 6% and remove the VAT rate of 12% so that VAT on restaurants, hotels and catering is also reduced to 6%.
- Halving the number of Swedish authorities and imposing a general efficiency requirement on other authorities.
- Lowering the benefit ceiling so that a maximum of half a price base amount before tax is paid to benefit recipients.