2024.04.23
The report is clear: Dramatic increase in tax collection
APPLiA is today releasing a comprehensive, follow-up report on the impact of the electronics tax last year and a forecast for how the tax will perform in the current year. The report shows the causes and consequences of the dramatic increase in tax collection that has occurred.
Since the political change in the structure of the electronics tax (also called the chemicals tax), which was supposed to make it easier for authorities to keep order and control the tax flow, the tax collection in real terms has increased by almost 50 percent. From July 1, 2023, the simplification consisted of the previous right of deduction for reactively added flame retardants in electronics disappearing. The reason for the deduction was that the reactively added agent was considered a better environmental alternative instead of the products that had so-called additively added flame retardants. Now, that environmental advantage no longer provides a right of deduction.
Well, the Riksdag established in the budget bill that this simplification would take place without increasing the tax collection from market players. The tax rate was therefore reduced by 1.6 percent at the end of the first half of the year, which was supposed to compensate for the loss of the right to deduct. The result was instead a gross 'miscalculation' on the part of the Ministry of Finance, which instead resulted in a substantial increase in the tax burden by almost 50 percent. This is precisely what APPLiA, the Electronics Industry, the Confederation of Swedish Enterprise and other industry players had warned about.
The second half of the year is a nightmare
The image above shows the tax collection during the first two half years of last year compared to the corresponding periods in 2022 – during the first half of 2023, the right to deduct for reactively added flame retardants was in effect, during the second half it was abolished by the Riksdag.
During the first half of the year, the tax collection for white goods decreased by 7 percent, which roughly corresponds to the volume decline in the market for these goods. In the second half of the year, the real tax collection increased by a full 48 percent. If we take into account that the market volume for the taxable products decreased by 15 percent during the second half of the year, the actual increase in the tax collection for white goods is more like over 60 percent!
Abolished deductions increase costs significantly
Now that APPLiA is releasing the report on the electronics tax in 2023, we note that the basis for the sharp increase in tax collection from Swedish consumers is due to two factors - the 8 percent index increase at the turn of the year 2022/23 and the abolition of the right to deduct as of July 1, 2023.
For all product categories, the overall deduction percentages are falling sharply. All electronics manufacturers who have made the effort to add mandatory reactive flame retardants are now announcing that their deduction rights are now worth nothing. Our summary above shows, for example, washing machines and dryers where deductions go from around 40 percent to almost zero from July 2023. For the others, the deductions are now barely noticeable, with only a few individual percentages.
In summary, the APPLiA report states that during the year, a tax levy of a total of SEK 2 billion has made white goods and home electronics more expensive for Swedish consumers and provides further incentives to purchase these through foreign channels that are not affected by the electronics tax.
Our message to politicians
Now this special taxation must be removed before it permanently damages both the many jobs in Swedish trade and also the trust in Swedish environmental and taxation policy. An ineffective special taxation in Sweden does not solve the problem - many of our Swedish politicians also realize this, so now a "workshop" is required for the autumn budget! Listen to what representatives of (M), (KD) and (SD) also think what needs to be done in the article opposite.
Download the full report on the Electronics Tax 2023 below and the forecast for how large the tax levy could be for the full year 2024 - if it is not corrected or abolished before then.
Electronics tax 2023
