The Swedish Government today presented an updated proposal for the so-called “risk tax”. The proposal has been sent on a quick consultation with a deadline of 18 June.
According to the proposal, Kommuninvest – which is owned by Swedish municipalities and regions and finances around 60 per cent of the investments in the municipal sector – would be forced to pay the tax in full. Tax rates have been adjusted slightly since the previous proposal. For Kommuninvest, the tax would now add an extra cost of about SEK 280 million in 2022 and around SEK 330 million from 2023 onwards.
Kommuninvest is a non-profit collaboration. The tax would therefore lead directly to higher interest rates for municipalities and regions. The result would be a marked increase in the costs of the extensive welfare investments that the municipal sector is facing. The tax would hit small and medium-sized municipalities particularly hard. They usually have Kommuninvest as their only source of financing.
Paradoxically, the proposal would also, most likely, generate increased risks in the financial market. The transfer of large borrowing volumes away from Kommuninvest to individual municipalities and regions would significantly raise the risk level in the financial system. Kommuninvest has large own funds and liquidity reserves to be able to cope with market disturbances. Individual municipalities and regions do not.
– The Government’s proposal puts societal welfare in second place. That’s a strange priority. It is ill conceived to hamper local communities investment in welfare in this situation. Creating an exemption from the tax for Kommuninvest is still the only reasonable way to go. We know that the Government has tried to find solutions, but has run into difficulties in the dialogue with the European Commission. We also know that there are several other possibilities for achieving a well-balanced exemption that the Government now has to look at, says Göran Färm, Chairman of the Board of Kommuninvest Cooperative Society.
– We are surprised that the government presents the proposal in this form. The fact that no exemption has been made for Kommuninvest is unreasonable. We are guaranteed by our members – 292 municipalities and regions – and work consistently at very low risk levels. With this proposal, the benefits of Kommuninvest’s large-scale set-up would be reduced. This would further add to the cost increases for small and medium-sized municipalities, says Tomas Werngren, CEO of Kommuninvest.