Monday, September 08, 2008

Sweden Lowers Corporate Income Tax

Today, the Swedish centre-right government announced that it is cutting the corporate income tax from 28% to 26.3%, while also implementing a small reduction in payroll taxes. Previously it has been hinted that there will be some form of income tax cuts as well.

As could be expected , business organizations are pleased with the news while the left-wing opposition are not so pleased, although the Social Democrats actually hint that they do not really oppose the corporate income tax cut as they recognice the need for that to be competitive.

This is good news for Sweden as this kind of supply boosting tax cuts are exactly what the Swedish economy needs when price inflation is high while the economy risks slipping into a recession. Still, while it will have positive effects the cuts aren't big enough (At 26.3%, the corporate income tax is still a lot higher than in many other European countries) to have any dramatic effects and it remains to be seen whether it will be enough for Sweden to avoid a recession.


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