STOCKHOLM: For many Swedish businesses and prosperous households, years of falling taxes and reforms that put maids in middle class homes and fed a consumer boom in luxury cars and holidays in Asia may be drawing to a close.
Elections on September 14 look set to throw out a centre-right government as many voters rebel against welfare cuts, stubbornly high unemployment, poor school results and tales of hospitals straining to care for patients.
Eight years of Prime Minister Fredrik Reinfeldt helped transform Sweden’s image from that of a high-tax socialist state to a European economic star with a AAA rating, startups such as Spotify and export brands like IKEA and fashion giant H&M.
Polls now show a likely victory for the Social Democrats, the party that created Sweden’s cradle-to-grave welfare state, although a new government may end up as a weak minority government coalition of centre-left and Green parties.
That worries many in business.
“I just hope that any new government realises that we build our prosperity on growth, not higher taxes,” said Hakan Samuelsson, chief executive of Chinese-owned Volvo Car Group, one of Sweden’s biggest private sector employers and exporters.
Reinfeldt cut income taxes five times and held out tax incentives for household services, youth employment and even restaurant meals to foster job creation. The result was more restaurants with Michelin stars than ever before and a boom in purchases of holiday homes in sunny southern Europe.
The tax cuts helped lift after-tax income for Swedish workers by roughly 30 percent, easing pressure on companies to raise wages in the wake of the 2008 financial crisis.
But all was not well. Stockholm’s worst riots in years hit its poor immigrant neighbourhoods in 2013 and scandals erupted in privately-run homes for the elderly.
Activists even staged a “class war safari” that bussed tourists through a poor Stockholm neighbourhood before viewing the luxury hotels, villas and yachts in a wealthy district,
Even centre-right supporters were shocked when the OECD’s PISA schools survey last year showed Swedish 15-year-olds had the worst decline in results of any participating member of the Organisation for Economic Cooperation and Development. They were below average in many areas.
Scandals also surfaced at elderly care homes with reports about residents being locked up in closets and some people not being fed for most of the day.
“It feels like the centre-right is pretty tired really,” said Richard Osterlind, 44, part-owner of a communications agency who lives in Ostermalm, an affluent area in the centre of the capital. “That is why I can understand people wanting to vote the other way now just to stir things up a bit.”
That could all change under Social Democrat leader Stefan Lofven, a former welder and trade unionist who is considering overturning reforms and hiking taxes on the rich and on a wide array of companies if he is elected.
Reuters
