The government refuses to lower the electricity tax – despite KI's appeal

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Published 24 January 2023 at 17.42

Economics. According to the Economic Institute, a reduction in the electricity tax would reduce inflation. But the government – which collects tens of billions of kroner from the sky-high electricity bills – refuses to agree to such a measure. This despite the parties' election promises, Dagens Industri reports.

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The government claims, unlike the expert authority KI, that a reduced electricity tax would instead INCREASE inflation.

But in fact, the state's tax revenue has increased sharply due to the record high electricity prices. Last year alone, the state collected SEK 45.9 billion in electricity tax, writes DI.

“The state gets rich because households are on their knees”
The Association of Taxpayers is strongly critical of the government's actions.

“When the price of electricity during the winter is expected to be ten times higher than normal, the economy is damaged and Sweden risks ending up in an even deeper recession. At the same time, the state makes a fortune when the tax revenue on electricity shines and state-owned Vattenfall and Svenska Kraftnät make multibillion-dollar profits. It is not reasonable for the state to become rich of households going to their knees,” the association writes on its website.

Half of the electricity bill consists of tax
The electricity tax has almost quadrupled in 25 years, Taxpayers further states, and about half the electricity bill now consists of tax.

Inflation is at a historically high level due, among other things, to high energy prices. The spot prices for electricity in southern Sweden have risen by 500 percent since 2020, and many households and companies are now seriously under pressure. The state's tax revenue from electricity has increased by 54 percent since 2020, according to new figures from Taxpayers, writes DI.

Broken election promises
All this goes against what several of the parties who now governs Sweden said in the election campaign. The Liberals, the Sweden Democrats and the Christian Democrats had proposals to lower the energy tax and VAT on electricity. The moderates did not promise any tax reductions, but suggested that the tax be abolished temporarily for two months.

“It is not reasonable that the state should receive a large increase in revenue when electricity prices skyrocket. Should the high prices persist during the winter, this corresponds to increased VAT revenue of SEK 7 billion. These extra revenues should go back to households,” the Moderates wrote just over a year ago in a press release.