Objectives for municipalities and county councils
The Government wants to put municipalities and county councils on a good and equal financial footing, thereby contributing to effective, high-quality local government services.
Local self-government is an important element of the democratic system in Sweden, as specified already in the Instrument of Government, one of the fundamental laws of the Swedish Constitution. Under the Instrument of Government, municipalities and county councils have the right to levy taxes. The law also details what municipalities and county councils may do (voluntary activities) and what they must do (compulsory activities). The framework for local government activities is set up by the Riksdag and the Government in laws and ordinances. Regulations adopted by government authorities can also impact activities.
Municipalities and county councils have long had the task of ensuring local common welfare and interests. The county councils have been given tasks (mainly health and medical services) that require a larger population base than most municipalities have. Between 65 and 70 per cent of operating expenses are financed by the municipal taxes and county council taxes levied on our taxable incomes. In addition, central government contributes various central government grants, making up between 15 and 20 per cent of the revenue. More than half of the central government grants are general central government grants, the use of which, unlike targeted central government grants, municipalities and county councils determine on their own.
The system of local government financial equalisation equalises differences in tax capacity between municipalities and county councils. In addition, there is an equalisation of municipalities’ and county councils’ cost differences resulting from differences in age structure, geographical conditions and socio-economic factors. This puts municipalities and county councils on a good and equal financial footing, thereby contributing to effective, high-quality local government services.