• Short Summary

    In a joint vote, Dec. 1, both Houses of the Swedish Parliament passed a Socialist Government Bill for a 4 per cent turn-over tax.

  • Description

    In a joint vote, Dec. 1, both Houses of the Swedish Parliament passed a Socialist Government Bill for a 4 per cent turn-over tax.

    Joint voting became necessary after the Upper House, in which the Socialists have an absolute majority, passed the Bill, Nov. 27, by 77 votes to 70, and the Lower House subsequently rejected it by 117 votes to 107.

    The position at that point was such that Socialist Prime Minister Tage Erlander told Parliament the Government would resign if the Bill were defeated. But in the final vote the Communists - holding the voting balance, with five members in the Lower House and two in the Upper, - unexpectedly came to his rescue, when observers thought they would abstain and thus bring about the fall of the Government.

    Expected to cause a rise of 3 per cent in Sweden's cost of living, the 4 per cent turn-over tax is a result of the Socialist policy of increasing taxation rather than cutting State expenditure. This policy has led to a budge deficit of about GBP70 million which, according to Government estimates, may rise further to about GBP165 million by next year.

    Faced with the alternative of either a 30 per cent increase in State income tax or a new 4 per cent turn-over tax, the Government chose the latter. This will cover the GBP70 million immediately needed. To find the full GBP165 million, the Government may have to borrow or increase the turn-over tax, unless production rises sharply, causing an unexpected increase in State revenue.

    For some time, the turn-over tax plan has been severely criticised by the opposition parties which stressed that it would under all circumstances prove inflationary at a time when it is important that Sweden avoids pressure on her currency. Next July she will have both better opportunities and keener competition in the European Free Trade Area, and inflation may be a fatal handicap.

    The one cut in State expenditure which the Swedish Government has so far decided to make is to reduce a promised increase in old age pensions. This has brought strong protests from the Swedish National Association of Old Age Pensioners.

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    Reuters - Source to be Verified
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    Available on request
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