Swedish finance minister Anders Borg has hit out at the private equity industry once again with new proposals to eliminate tax schemes.
Following media and tax authority investigations, which highlighted how the asset class has reduced tax payments to the state while simultaneously generating profits in the tax-funded health sector, the Swedish centre-right party has announced proposals to prevent this from continuing.
Borg told the country's press that new plans would limit aggressive tax schemes and prevent the use of tax havens. The new rules, which will come into play early 2013, are expected to increase tax revenues by SKr6.3bn (€707m).
The plans have sparked criticism from the Confederation of Swedish Enterprise, the country's largest business lobby, which said that the plans put short-term political populism before investment and jobs in Sweden. Commenting on the proposals, the confederation's chief executive Urban Bäckström expressed his surprise that the authorities are choosing to go forward with plans that have already received criticism and have been challenged legally. He likened the proposals to gradually changing the rules of a football game throughout the match.
Bäckström added that the new rules will reduce the predictability required by firms when deciding whether or not to invest in Sweden. He said that creating uncertainty over interest deductions may provide short-term cash for the government but it will drive up the return and capital costs for investments, which will result in fewer jobs in Sweden.