STOCKHOLM Feb 6 Sweden's competition watchdog
has come out against a proposed tax on financial services
companies, saying it would hit their ability to compete
internationally and skew the domestic market.
The opinion, published on the watchdog's website, was sent
to the finance ministry, which is consulting on the proposal
that could be introduced in the autumn budget.
Sweden's centre-left minority government has long sought to
impose a financial services tax, saying the sector - which is
exempt from value-added tax - should pay more to the state.
Critics, however, say a tax would be a heavy blow on a major
contributor to the Swedish economy and could speed up a drive
among some financial firms to move jobs abroad to take advantage
of cheaper labour.
A government-appointed commission proposed in November an
additional 15 percent payroll tax for the financial services
sector, a move it said would raise as much as 7 billion Swedish
crowns ($795 million) a year for state coffers.
The proposal, which has yet to be turned into a government
bill, is going through a three month consultation process before
the government decides whether to press ahead.
"The Swedish Competition Authority considers that the
proposal entails a competitive disadvantage for the Swedish
financial services sector in relation to financial companies in
other countries," it wrote to the finance ministry.
The authority said the proposal would also lead to more red
tape, which could particularly hinder smaller financial firms.
The Swedish Council on Legislation, a state authority that
performs judicial previews of draft bills the government intends
to submit to parliament, has also rejected the proposal. It said
a satisfactory impact assessment had not be carried out.
The plan has faced criticism from centre-right opposition
parties, but the government can attach it to the budget bill
which means it would likely pass in parliament.
It has also drawn criticism from the financial sector, which
has said it would lead a banking sector that includes Nordea
, Handelsbanken, Swedbank and SEB
to move more jobs abroad.
The Swedish Bankers' Association said a study it had
commissioned by consultancy Copenhagen Economics showed Sweden's
financial sector could lose up to 16,000 of its 85,000 jobs if
the commission proposal went through.
Sweden has the third biggest financial sector in the
European Union relative to the size of the economy, behind only
Switzerland and the Netherlands, according to the International
Monetary Fund. It makes up 4.7 percent of Swedish gross domestic
Financial markets minister Per Bolund told Reuters last week
the government would listen to the opinions of the consulted
bodies before finalising its proposal, but the aim was to
introduce a financial tax in the autumn budget.
($1 = 8.8044 Swedish crowns)
(Editing by Niklas Pollard and Mark Potter)