Sweden Boosts ROT Deduction to Stimulate Economy in May

The ROT deduction is temporarily increased in the government's initiative to boost the economy. The increase accounts for the larger part of a stimulus package totaling 5.8 billion kronor.

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Sweden Boosts ROT Deduction to Stimulate Economy in May
Photo: Axel Narving/TT

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The low-growth period has become more prolonged than expected, therefore the government and the Sweden Democrats are presenting several initiatives to stimulate the economy, says Finance Minister Elisabeth Svantesson (M) at a press conference.

It's a mix of measures that will really make a difference, she says.

A large part of the initiatives are directed towards the construction industry.

It's after all the construction industry that's having the toughest time, continues the Finance Minister.

"Boost to households"

Among other things, it is proposed to strengthen the ROT deduction. Companies will be able to deduct 50 percent of labor costs, instead of 30 percent as today. The change is temporary and applies from May 12 and for the rest of the year. The total cost to the state treasury is 4.35 billion kronor.

It's a boost to households to now take the opportunity to renovate that bathroom, or extend the summer cottage or renovate the apartment, says Employment and Integration Minister Mats Persson (L) and continues:

If you've been thinking of doing it in the next few years, it's good to do it this year.

The National Audit Office has previously criticized the ROT deduction for costing the state more in the long run than it generates. In December 2023, the agency therefore proposed reducing the ceiling.

According to Magnus Persson (SD), chairman of the Riksdag's Labor Market Committee, the effect is different in the short term.

This is a short-term economic measure and then you know that the ROT deduction works, he says.

Half of the reform space

Elisabeth Svantesson also says that a strengthened ROT deduction is a good economic measure.

Especially in this situation, since the construction industry is the industry that's having the toughest time, she says.

The government and SD are also agreed on allocating an additional 500 million kronor to maintain roads across the country.

The package also includes several targeted labor market and education initiatives. Among other things, more summer jobs for young people, an investment in more short courses in vocational education and the previously announced increase in unemployment insurance will be brought forward, from October to the beginning of August.

The total cost of the proposals in the package is 5.8 billion kronor of the reform space in the spring budget. That's approximately half of the total space of 11.5 billion.

The spring budget will be presented in its entirety on April 15.

Strengthened ROT deduction: 4.35 billion

Road maintenance: 500 million

Investments in vocational education: 407 million

Regional vocational education initiatives: 302 million

Summer jobs for young people: 250 million, but the money is taken from the current budget

Capital injection to the Norrlandsfonden: 160 million

Injection to the Employment Agency: 60 million

Earlier increase in unemployment insurance: 56 million

Source: The Government

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

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