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The Swedish Model: Cutting business taxes

    Alongside the news of QE3 in America, there is a less-reported form of economic stimulus taking place in Sweden. Often venerated by the left as a model of a redistributive model along with the other ‘Nordic states’, Swedish Prime Minister Fredrik Reinfeldt has announced the country will slash corporation tax from 26.3% to 22%, lower than the EU average in a move aimed at freeing both small and large businesses from the burden of high tax rates.

    Discussing the move, which is understandably widely popular amongst businesses, Reinfeldt said:

    This is the most harmful tax of all.”

    Our own paper ‘How to Cut Corporation Taxpublished prior to the Budget demonstrated how cuts in the level of CT led need not have large budgetary implications. Since 1982 CT rates have halved, while yields to the Treasury have grown from 2% to 2.8% of GDP.

    Sweden has recognised the damaging effects of CT on business and the consequences for growth and international competitiveness, it should spark recognition here that the rate of CT should fall further to ensure profitable businesses get Britain on the path to economic recovery.  

    Lewis joined the Centre for Policy Studies in April 2011 with responsibility for social media and digital engagement.

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    Anonymous - About 2885 days ago

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