Sweden's centre-right government said on Tuesday it planned to scrap the country's property tax at the beginning of next year, but replace it with other revenue raising measures. The four coalition parties in Prime Minister Fredrik Reinfeldt's ruling alliance will present their plan in the budget proposals in April.
Enterprise Minister Maud Olofsson said that the estimated 16.3 billion crown ($2.32 billion) tax shortfall would be made up by a charge imposed at local level, bringing in around 10.3 billion crowns, and a hike in the tax on gains on sales of property to 30 percent from 20 percent.
"The government's intention is that no one should pay more in property tax than they would have done under previous rules," the government said in a press release. "An unfair tax which lacked popular support and legitimacy will be scrapped."
The alliance of Moderates, Folk, Centre and Christian Democrats swept to power last September promising tax and welfare cuts to boost the job market. It has already reduced income tax by 37 billion crowns this year and plans to scrap a wealth tax.
While the property tax will be funded by other revenue-boosting measures, the government has plenty of room to be generous. Sweden's National Financial Management Authority (ESV) last week raised its budget surplus forecasts for the next two years, thanks to surging corporate tax revenues, a wider tax base and lower unemployment and sickness benefit payments.
It reckons the government will run a 63.8 billion Swedish crown ($9.10 billion) surplus this year and will be 37.1 billion crowns to the good in 2008. The ESV's forecasts do not include the government's plans to sell of a number of state companies, including Absolut Vodka maker Vin & Sprit, which the government hopes will raise around 150 billion crowns over the next three years.