SHARE
COPY LINK

MONEY

Sweden to give out 14 billion kronor in fuel and power subsidies

Sweden announced plans on Monday for a 14 billion kronor (€1.32-billion) subsidy package to help Swedes cope with soaring prices resulting from Russia's invasion of Ukraine on the heels of winter's sky-high energy prices.

Swedish Finance Minister Mikael Damberg announcing the subsidy package on Monday.
Swedish Finance Minister Mikael Damberg announcing the subsidy package on Monday. Photo: Christine Olsson/TT

The proposed subsidies include a temporary reduction of petrol and diesel taxes, a one-time minimum payout of 1,000 kronor ($104, 95 euros) to car owners, a one-month extension through March of a winter electricity subsidy for homeowners in central and southern Sweden, and a temporary increase in housing subsidies for the poorest families.

Sweden has among the highest prices in the world for fuel due largely to its high taxes, at around 21 kronor ($2.20, 1.99 euros) per litre for petrol and 25 kronor for diesel.

If approved by parliament, the measures would come into effect on June 1.

“We are today presenting an exceptional package of measures to counter the price increases we are now seeing as a result of Russia’s invasion,” Finance Minister Mikael Damberg said in a statement.

“The situation is still uncertain and prices are very volatile, but we can see that we need to support consumers in this acute stage and at the same time take measures to reduce our fossil fuel dependency.”

Prices in February were up by 4.5 percent from a year earlier, Statistics Sweden said on Monday, the highest level since 1993 when the country was in deep economic crisis.

Electricity was 14 percent higher than a year ago, while food prices rose by 3.6 percent and clothes by five percent.

Analysts noted that those increases in February did not include the effects of Russia’s invasion — which began on February 24 — and predicted further hikes to come.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

ECONOMY

Winners and losers: What are the tax cuts for Sweden in 2025?

A total of 27 billion kronor of Sweden's 60 billion kronor budget reforms will go towards lowering taxes. Let's take a look at the main tax cuts and who is set to benefit the most.

Winners and losers: What are the tax cuts for Sweden in 2025?

Who are the winners and losers?

Two high earners who have a joint income of around 180,000 kronor a month will get just over 3,400 kronor more in their bank account every month, whereas a couple of pensioners will only get 226 kronor more a month, according to banking giant SEB.

What are the tax cuts?

A new employment tax credit, a rebate given to everyone who has a job, worth 11 billion kronor. This will benefit everyone earning more than 16,000 kronor a month.

A rule that previously reduced the employment tax credit the more you earned will be scrapped. People earning between 778,000 kronor and just over 2 million annually will benefit the most. It’s expected to cost the state 4.7 billion kronor.

Taxes for pensioners are being lowered to the tune of 2.5 billion kronor, which means a median pensioner will see their taxes lowered by approximately 1,400 kronor a year.

The cap on who has to pay state tax will be raised to monthly salaries of 53,590 kronor. This cap is usually automatically raised every year in line with inflation, but last year the government suspended the hike due to Sweden’s rampaging inflation at the time.

READ ALSO:

Are you one of 3.5 million people in Sweden saving money in an ISK account? In the new budget, the fixed tax on ISK accounts will be scrapped for any accounts with a balance of less than 150,000 kronor, rising to 300,000 kronor in 2026.

Cutting Sweden’s aviation tax will cost the state 870 million kronor. It corresponds to around 80 kronor for a domestic flight.

A total of 3.2 billion kronor will be spent on lowering the tax on fuel for vehicles.

If you own a motorhome, you’ll get a tax cut of almost 7,000 kronor, as 90 million kronor of the budget is allocated to lowering taxes on recreational vehicles.

What are the reactions?

The centre-left opposition immediately accused the government of unfairly prioritising high earners, also criticising the fact there’s significantly less money earmarked for welfare in this budget compared to last year: down from 16 billion to 7.5 billion kronor.

“It not only makes a mockery of ordinary people, but is also bad for the Swedish economy,” said Mikael Damberg, finance spokesman for the Social Democrats.

  • Don’t miss the latest news and analysis about the Swedish economy by downloading The Local’s app (available on Apple and Android) and then selecting Economy in your Notification options via the User button

Pensioners’ association PRO also argued their members should have been compensated more in the budget. “We’re really talking ‘thumbs down’,” PRO chairwoman Åsa Lindestam was quoted by the TT news agency as saying.

Swedish Commerce, the association serving the trade and commerce sector, on the other hand welcomed the budget, as its members are directly affected by strengthening customers’ purchasing power – a key priority for the government in the bill.

The Confederation of Swedish Enterprise also praised the budget for trying to speed up growth, get more people into work and strengthen Sweden’s competitiveness.

SHOW COMMENTS