Crisis Support Seven Billion More Expensive than Expected

The state allowed companies to defer tax payments in connection with the pandemic. The crisis measure, which will cost the state seven billion more than expected, has not reduced bankruptcies, but still had positive effects, according to the National Audit Office.

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Crisis Support Seven Billion More Expensive than Expected
Photo: Jessica Gow/TT

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Between 2020 and 2023, companies were given the opportunity to apply for temporary deferment of payment of employees' income tax, payroll taxes, and VAT. Such support was also provided to companies that were affected by high electricity costs in 2023.

The purpose of the support was to facilitate for companies with temporary liquidity problems.

In an audit report, the Swedish National Audit Office writes that the overall conclusion is that the support has been a relatively effective measure that led to increased liquidity in the business sector.

However, they also point out deficiencies. There is no evidence that the support prevented bankruptcies. The companies that were least viable even before the pandemic are overrepresented among the recipients of the support.

The tax deferments have also become more expensive for the state than expected. The estimate was that the net cost would be SEK 2.6 billion during the period 2020-2027. According to the Swedish National Audit Office's calculations, the final cost will be around SEK 10 billion.

The Swedish Tax Agency's forecast in January 2024 was that SEK 12-16 billion of the temporary deferments would not be possible to repay.

"Our assessment is that this type of support should only be used when the banks' lending does not function as it should, and that the opportunity for deferment therefore should not have been extended after 2021," says Auditor General Christina Gellerbrant Hagberg in a press release.

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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