Sunday, September 11, 2005

How is it all financed?

In one short word? Taxation. Of course. You don't think people would pay for all of this voluntarly, now do you?

I live in a rather small municipality (about 25.000 souls) in the outmost southern part of Sweden, neighboring to Denmark. This municipality is widely known for three things:

1. The Volvo Scandinavian Masters PGA-tour.

. The only town (about 7.900 inhabitants) that has been compltetely evacuated due to a derailed train wagon with poisonous gas. (The kids just loved that...) Actually it was two towns in the same municipality since the wagon derailed almost exactly in between them so the number of evacuees where probably more like 12.000 people.

3. Lowest taxation in all of Sweden.

The swedish income tax is on average about 30 per cent in the different municipalities and is somewhat different depending on your income. In our municipality we pay 28 per cent income tax.

One of the biggest complaints that people have against the swedish taxation system is that it's "tax on taxes". That's actually true in many cases.

There's taxation on everything that you buy, called VAT. You probablly have a similar system? But let me give you an example.

Let's say your produce a gadget. Your cost for producing this gadget is one dollar. Since you want to make a profit, you sell it for two dollars. The buyer has to pay you two dollars and 50 cents. The 50 cents are 25 per cent VAT.

Now, the buyer is a merchant and sells your gadget in his turn with two dollars profit. The 50 cents he payed you are tax deductable. Anyone who buys the gadget has to pay four dollars plus one dollar VAT. And so it continues until the final customer. The more middlemen the higher the price and VAT. I'm pretty convinced that other countries have the same systems, but that was just the VAT.

We also pay very high taxes on gasoline. In fact, it's almost 63 per cent with VAT and enviroment taxes. One gallon of gas is about 3.78 litres. With a pricetag of 12 SEK/litre we end up with... 45.36 SEK/ gallon which equals about 5.92 USD/gallon. For a family with a normal income that's pretty hefty, but on the other hand we get much of that money back in terms of day care, school system, health care and so on.

Unfortunatly some people (mainly middleaged, single males) don't see it that way. Instead, they keep on ranting about politicians lining their pockets with high salarys. For some reason their brains just don't se the connection between taxation and welfare systems. The most unfortunate about this is that they get people to believe them...

So, what kind of taxes do we have?

The major taxes are:

Income taxes and VAT
Wealth tax (If your income or fortune is over a certain amount you pay extra tax.)
Residence taxes (As a house owner you pay this tax.)
Energy taxes (You use electricity, don't you?)
Enviromental taxes (You pollute, don't you?)
Church or burial taxes (Even if you don't go to church, you still would like to be buried when you die, don't you?)

I surely missed some of the taxes we have but my main point is that there is almost no aspect of life in Sweden that doesn't have it's own taxation in one way or another.

The last fifteen years there has been a large amount of refugees and immigrants coming here and this has put a big strain on the economy, but that's not the whole truth, how convinient this "truth" may sound in some peoples ears. It's much more complicated than that.

For these short sighted people "global decline in the economy" is just an empty phrase with absolutely no meaning, what so ever. If they can, they blame everything bad on immigrants. That's really sad because some of these people actually have sharp brains that could be of better use if they used them to their full potential and stopped being so full of crappy nationalism. It hasn't worked in any developed country and it most certainly never will.


Fröken Mera said...

Okej.. Dax att finslipa engelskan med andra ord *tummen upp*

Ps! Snyggt gjort det där bildspelet med vacker-ungarna!

Virginia Gal said...

oh man, you have a comment in Swedish, leaves us Americans out.
I know a tiny bit about Swedish geography (having visited Stockholm), I'm guessing you live maybe near Malmo? Thanks for the good essay on taxes, I didn't really understand how the system worked in Sweden, just that I think it is a compassionate model that more countries should use.