Sweden's Food VAT Reduction Faces Political Debate as Finance Minister Signals Possible Reversal

Swedish Finance Minister Elisabeth Svantesson has indicated that the temporary reduction of the food VAT from 12% to 6%, effective from April 1, may not be permanent. Svantesson described the tax cut as a temporary measure designed to stimulate the economy during a recession, stating, "My starting point is that this is temporary to get the economy going, so that we do not get stuck in this recession that is causing quite a bit of disorder."

This announcement has sparked criticism from the Sweden Democrats (SD), particularly vice party leader Henrik Vinge, who opposes any reversion of the reduced food tax and emphasizes the importance of maintaining low food prices. Vinge pointed out that "the budget is decided by four parties," signaling that future budget negotiations will determine the policy's fate beyond its current timeframe ending in 2027. He further argued that Sweden should prioritize cutting unnecessary expenditures over raising food taxes. Vinge also criticized Sweden's high international aid spending in light of domestic financial pressures.

The 50% reduction in food VAT costs the state approximately 37 billion kronor until the end of 2027. The issue remains a critical point of contention within the Tidö coalition government, with some irritation expressed over credit claims relating to the VAT cut. The Sweden Democrats assert that if they maintain a parliamentary majority, they will push to ensure the lower VAT rate remains intact.

As budget negotiations unfold, the fate of the food VAT reduction will be a central issue impacting Swedish taxpayers amid ongoing economic concerns.