No tax reform without also taking into account the property tax

Erik Åsbrink avoid to mention the word real estate taxes in his article. But if there is to be any tax reform with reduced marginal tax rates and at the same time, income inequality goes this is hardly to achieve without clarity in the debate.

By the tax reform of 1991 replaced the previous standard taxation of villas and holiday homes with property taxes. The tax amounted to 1.5 per cent from 1993. This was supplemented with a rule that no tax would be paid during the first five years after completion, and only half tax in the following years. This rule was expanded from the year 2013 to the full tax exemption during the first 15 years after completion. The property tax was transformed from the year 2008 to a ”municipal property” and the tax rate is now a maximum of 0.75% of the cadastral value.

introduced from 2008 on a system with the regressive taxation of owned single-family homes. In most of the municipalities in Sweden is the tax on average in the vicinity of 0.75% of the cadastral value. In the municipalities of Danderyd and Lidingö is the average tax rate in the vicinity of 0.1 percent of the cadastral value.

During the period 1968-1980, we had a system for the taxation of capital gains on the sale of owned houses where the cost was counted up with the rate of inflation (consumer price index). This meant that the profit corresponded to the supplementation of purchasing power for the seller that accumulated during the holding period.

At the tax reform in 1991, there was a transition to be deleted from the appreciation in the nominal kronor in the calculation of the taxable profit. When in this way the inflation was not taken into account, there could be no question of lock-in effects. That remedy was introduced a ceiling for the tax levy. This system was not long-lived. Instead, the reduced tax rate for holding gains radically. Furthermore, introduced deferment with the removal of the tax on the capital gain upon acquisition of new owned housing. The total accumulated uppskovsbeloppet currently amounts to about 300 billion sek.

on the capital gains or the deferral of taxation on the sale of owned housing is that it improves mobility. But in an article entitled ”the Myth of the immobile housing market,” the journal Ekonomistas (2017-11-15) by Daniel Waldenström reported that Sweden in 2011 with 23 per cent escalation in the last two years, finished 3rd among 26 OECD countries when it came to having a maximum of relocation.

In the investigation that preceded the tax reform in 1991, advocated that the taxation of condominiums – the most favoured tenure status – would be the same as for home owners. This has still not been followed up with action.

I agree with Erik Åsbrink that a removal of the värnskatten should be balanced by other measures, which makes the overall fördelningsprofilen will be acceptable. But there is no evidence to suggest that the four parties who have entered into the ”januariavtalet” is prepared to take the necessary measures in housing taxation.