Sweden: repair your goods to pay less taxes

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VAT breaks for those who have their appliances, bicycles, and clothes repaired. The goal: limiting consumerism and decreasing emissions.

Do you want to pay less taxes? Go to the basement and get the tool box. This, in a nutshell, is the message of the Swedish government, which is introducing tax breaks for the citizens who choose to repair their items instead of buying new ones, from washing machines to bikes.

Sweden’s ruling Social Democrat and Green party coalition submitted a proposal to the government to decrease the VAT rate on repairs to bicycles, clothes and shoes from 25% to 12%. The proposal would also allow the citizens to claim back from income tax half of the labour cost on repairs to appliances such as fridges, ovens, dishwashers and washing machines.

“We believe that this could substantially lower the cost and so make it more rational economic behaviour to repair your goods” said Per Bolund, Sweden’s minister for financial markets and Green party cabinet member.

Bolund is hoping that the tax break on appliances will spur the creation of a new home-repairs service industry, providing much-needed jobs for the lower social strata.

The incentives are part of a shift in government focus from reducing carbon emissions produced domestically to reducing emissions tied to goods produced elsewhere. Sweden has cut its annual emissions of carbon dioxide by 23% since 1990 and already generates more than half of its electricity from renewable sources. The problem is that emissions connected to consume goods kept increasing. Hence the need to intervene on the habits of buyers.

The proposals will be presented in parliament as part of the government’s budget proposals and if voted through in December will become law from 1st January 2017.

Source: The Guardian