In a new report, the Fiscal Policy Council criticizes the government's support policy for households, such as electricity subsidies and reduced taxes on gasoline and diesel, and calls it "bad economic policy."
It is a good intention to protect people, but it backfires. It reduces the transition that needs to happen in society when people do not pay the actual cost, says economist Karl Walentin, a member of the council.
“Sad when things cost money”
According to the Council, there is a risk that a new norm will be established in politics that means that the state steps in and compensates households every time prices rise.
I think the state doesn't need to step in and lower electricity or gasoline prices at all. It's sad when things cost more, but that's the reality. We in Sweden can't decide what gasoline and oil cost on the world market. It's just an unfortunate way for the state to take over costs from households and businesses, Walentin says, and he continues:
Sometimes it's just pure gifts to companies, such as the flight support that is being introduced.
Economist John Hassler believes that the Fiscal Policy Council could have gone even further in its criticism of the support policy.
“Dangerous thought”
"When it comes to electricity subsidies, for example, the state has decided that we will have among the highest electricity taxes in the EU, and at the same time we will have electricity subsidies. It's crazy policy," he says.
He sees a risk that the support will lead to companies and households not adapting to reality and that the necessary technological development will not occur.
The idea that we should try to keep people safe when changes occur in the outside world is dangerous, he says, and continues:
For example, it is obvious that what has now happened in the Strait of Hormuz should really be interpreted as the final nail in the coffin of the fossil society. If anything, we should try to speed up the transition.
