Halving food VAT risks becoming permanent – a costly mistake according to debate

During the mandate period, the government has sprinkled temporary support. Heavy reductions in the petrol tax have been interspersed with a halving of both the price of monthly cards in public transport and the food VAT.

Should it later be raised from 6 to 12 percent again in 2028, when the temporary reduction expires, the presenters recently wondered in SVT's final debate?

No, answered Nooshi Dadgostar (V) and Jimmie Åkesson (SD), who pressed the red button, while the other party leaders refrained from taking a stand by choosing yellow. So no one says yes outright. And if you combine the entries in the debate with the parties' responses in SVT's election compass, it is clear that the halving may remain.

Apart from the fact that the cut was wrong from the start – it is both expensive and not very accurate when it comes to supporting the most vulnerable households – the setting shows how easily something temporary becomes permanent. In this case, it would be a gigantic mistake.

All in all, this means a loss of around SEK 200 billion.

Because as Ebba Busch (KD) said during the "Mittenmötet" between her and Elisabeth Thand Ringqvist (C), it is not the big tax cut we are heading into in the next four years, among other things given the security situation. The Economic Institute's head of forecasting, Ylva Hedén Westerdahl, in her turn believes that "it goes without saying that there is no room for large unfunded investments" during the term of office (Altinget 12/8). And that is exactly what the government's Swish policy is - which Ebba Busch is actually one of the architects behind.

If the food VAT remains at 6 percent, it means approximately 64 billion kroner in the form of reduced tax revenue by 2030, in addition to the 37 it costs in 2026 and 2027. If the price in public transport continues to be halved, when the temporary reduction expires at the turn of the year, it will land at 52 billion for the entire term. And the petrol tax cuts - roughly estimated, the state's revenue will shrink by 90 billion if they are allowed to continue until 2030 (Aftonbladet 23/9).

All in all, this means a loss of around SEK 200 billion at a time when the Norwegian Economic Institute expects that the next government will have around SEK 95 billion in reform space 2027–2030. Add that Sweden is in great need of additional funding for, for example, defence, infrastructure and care for the elderly.

In that situation, it would be both stupid and populist to bet all the gunpowder on lower food VAT and cheaper petrol. Both the economic and the security policy risks in the outside world mean that the priorities must rather lie in building Sweden strong.

Otherwise, we are ill-prepared - if it hits.

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