The 2017 Budget in five minutes
On 20 September 2016, the Government presented its proposed budget for 2017 to the Riksdag. The Government’s entire proposal is available in the Budget Bill, which includes the Government’s Budget Statement, the Government’s assessment of the outlook for the Swedish economy and public finances, and the frameworks this provides for fiscal policy. The budget also contains the Government’s proposals on how government expenditure is to be allocated and an estimate of expected central government revenue in the coming year. The Bill is based on an agreement between the government parties and the Left Party.
Sweden's economy is growing strongly
In a world characterised by slow economic recovery, Sweden is strong. Sweden's growth rate is very high by international standards and will continue to be among the highest in our part of the world in 2017. Unemployment is declining and the employment rate is the highest in the EU.
Since it entered office, the Government has pursued a tight fiscal policy, substantially reducing the deficit in general government net lending since 2014. Net lending will be strengthened substantially up to 2020. General government net lending will have been reinforced by more than one per cent of GDP between 2014 and 2016, and is expected to be close to plus/minus zero in 2016. Net lending will deteriorate again somewhat in 2017, primarily as a result of temporary factors. In the years following 2017, net lending will be strengthened continuously and will be above the surplus target level at the end of the forecast period.
Building our society – taking responsibility for Sweden
In the Budget Bill for 2017, the Government proposes reforms totalling SEK 24 billion. Minister for Finance Magdalena Andersson on the budgetary direction:
"Welfare needs strengthened resources so that the municipalities can meet their obligations to the citizens, security needs to be strengthened and we need to continue managing the impact of last year's high intake of asylum seekers. At the same time, the Government's long-term priorities remain in place. Everyone who can work should work, schools must be given better means to reverse weak school performance, and we need to do more to tackle climate change," says Magdalena Andersson.
More resources for welfare
Sweden must have quality welfare services we can rely on. This is why the Government has made major investments in health, education and social services. Sweden's growing population makes strengthening welfare particularly important. The Government continues to prioritise welfare services and in this bill proposes that an additional SEK 10 billion a year be made available to municipalities and county councils in general government grants. This will enable them to take a long-term approach to developing their welfare services taking local conditions into account. Together with the Government's previous welfare investments, these resources correspond to the cost of roughly 30 000 employees in welfare services.
Education is fundamental to building an equitable society and a prerequisite for our future prosperity. In addition to the welfare billions, the Government proposes initiatives to promote reading and improve the conditions for highly challenged schools. To alleviate the teacher shortage, more teachers must be trained. The Government therefore proposes an expansion of teacher and preschool teacher education programmes. When fully implemented in 2021, this will correspond to 3 600 places.
The Government is continuing its work to achieve the lowest unemployment rate in the EU by 2020. Although unemployment is falling fast and employment rates are the highest in the EU, there are still far too many people without work. To increase people's chances of finding work and improve labour market matching, the Government has launched a new adult education initiative that when fully deployed will offer around 70 000 places. The Government also proposes further steps to align labour market policy, strengthen establishment activities for new arrivals and modern public sector jobs. For many people, not having a driving licence is an obstacle to finding work. The Government therefore intends to introduce CSN loans for driving lessons during this electoral period. Investments in broadband expansion will make it easier to work and run a business in rural areas.
One of the world's first fossil-free countries
Sweden will be one of the world's first fossil-free welfare nations. The Government has taken several measures to reduce emissions, speed up the transition to a sustainable society and achieve the environmental quality objectives. This is the largest climate and environment budget in Sweden's history; SEK 12.9 billion will be invested in reforms to reduce emissions and strengthen climate action. Among other measures, the Government proposes increased support to climate investments and urban environment agreements that strengthen public transport and promote cycling. The Government is also raising its level of ambition in the climate area by buying and cancelling emissions allowances and pushing for a tougher EU policy.
A safe and secure society
Sweden should be a country in which everyone can feel safe and secure. This requires measures that enable society to stand up against crime and terrorism. For this reason, the Government proposes increased resources to the Swedish Police Authority and the Swedish Security Service.
The Government intends to reform the compensation system for the reception of unaccompanied minors and young people in order to simplify the regulatory framework, improve municipalities' planning conditions, reduce the administrative burden and increase cost effectiveness. The new compensation system should come into force on 1 July 2017. Funds will be allocated to allow for compensation to municipalities that have difficulty adapting to the new compensation system.
Gender equality in society
The overall objective of the Government's gender equality policy is equal power for women and men to shape society and their own lives. The increased resources to the local government sector will contribute to a better work environment and more staff in sectors that employ a large number of women. A higher large-family supplement and higher income threshold in the housing allowance will improve margins for many women in a precarious financial position. A special initiative is being taken to reduce men's violence against women. The Government also intends to establish a gender equality agency in 2018.
Revenue increases and expenditure cuts in the budget
In the Budget Bill, the Government also proposes revenue increases and expenditure cuts.
Major savings involve:
- restructuring of the compensation system for the reception of unaccompanied minors and young people
- reprioritising labour market policy objectives to increase effectiveness and improve labour market matching
The Government also presents a number of tax proposals to increase tax revenues for the state. The proposals include:
- prohibiting deductions for interest expenditure on certain subordinated liabilities
- abolishing the right to income tax deductions for official meals
- limiting upward adjustment of the threshold for state income tax
- introducing tax on chemicals in certain electronic products
- increasing the tax on alcohol
Budget proposals for 2017 in figures
Central government expenditure proposed for 2017 amounts to SEK 972,4 billion and central government income is expected to amount to SEK 979,7 billion. Central government finances are therefore expected to reach a surplus of SEK 7,4 billion in 2017.
Tax proposals in the autumn budget
The Budget Bill presents and announces a range of proposals that involve both tax increases and tax reductions for individuals. Some of the proposals involving tax reductions are the tax reduction for repair and maintenance of white goods, and lower VAT on minor repairs (for example, bicycle repairs). Another tax reduction is that the ceiling for deferred capital gains will be abolished and that more generous deferment will be introduced for those moving to a cheaper home.
Some of the proposals and announcements that involve increased tax revenues are a chemicals tax on certain electronics products, limited upward adjustment of thresholds and an increase in alcohol tax.
Next step - Riksdag processing of the draft budget
When the Government has presented the draft budget, the Riksdag's processing begins. The Riksdag considers the Budget Bill in two different stages.
First, the Riksdag adopts the guidelines for economic policy and the economic framework of the central government budget. The decision on the economic framework – known as expenditure frameworks – is decisive for the further process in the Riksdag as the expenditure frameworks cannot be exceeded. This first decision by the Riksdag is usually referred to as the framework decision.
In the second stage, the Riksdag takes a position on how to divide up expenditure in each individual expenditure area, in other words how much money different activities will receive. Processing of the Budget Bill is complete when the Riksdag has taken a position on the proposals for all 27 expenditure areas. The Riksdag then finalises the central government budget.