Financial Journalists Who Don't Understand Finance
The reason is supposedly that today Vin & Sprit does not use a loophole in the Swedish corporate income tax law which would have allowed them to reduce their tax payments by hundreds of millions of Swedish kronor. If however the company were privatized then it would most likely use that loophole, thereby allegedly depriving the Swedish government of all these money.
It is appalling but not surprising (given my past experience of them) that financial journalists does not seem to understand basic principles of finance or business administration. Namely in this case that the value of a company is related to the present value of its future net profits and that it therefore is irrelevant for the Swedish government whether companies it sell can use a well-known and predicted tax loophole.
The reason why Vin & Sprit today does not use that loophole is most likely that it would be meaningless for them to do it. A company is supposed to act in the interest of its owner, in this case the government. And it would really be pointless for them to try to use tax planning since the money is going to the government anyway-whether in the form of taxes or dividends. For a private company the situation is different of course and in their case it is basically the duty of the corporate management to use tax planning to minimize the tax cost. This is probably what these journalists focus on. However, what they neglect is the basic fact the price the government will receive in its privatization is related to the expected future net profits. And because this loophole exists, investors will be willing to pay a lot more for the company than they would have done if the possibility to use this loophole hadn't existed. How much more? Well, basically equal to the present value of the tax reduction, meaning that what the government loses in tax revenues they gain fully in a higher sales price for the company.
These incompetent journalists apparently haven't thought about how much investors would have paid for the company if a 100% tax rate -without any loopholes- had been applied. The answer is of course zero (At least if you set aside possible perceived benefits of gaining operational control of the company). And the same principle applies to any taxation of companies that will be privatized. Because of the fundamental principle of finance that the value of a company is equal to the present value of its future profits, expected future taxation of these companies have the same financial effect on the government as taxation of government owned companies. That is, none at all.
In a rational world, financial journalists would be required to understand that. But apparently they aren't, at least not at Dagens Nyheter.