How Sweden ditched inheritance tax – and boosted its economy

Daniel Waldenström, a professor of economics at the Swedish Institute for Business Research, said this meant around a third of families in Sweden had to pay the tax. “That is a very high number if you compare it with other countries,” he said. 

Mr Ydstedt added that in thousands of cases widows and widowers were forced to abandon their family homes, with little wealth outside of their property able to foot the bill.

Despite the pain this inflicted on thousands of Swedish families, inheritance tax was by no means a significant revenue raiser for the government. Receipts from inheritance and gift taxes peaked in the 1930s, when they accounted for less than 1pc of gross domestic product. 

Unlike in Britain, Sweden offered no inheritance tax relief for family-owned businesses. This was disastrous for Swedish enterprise, where around nine in 10 companies were owned by people related to each other in 2004. 

Professor Waldenström added: “Entrepreneurs left Sweden and in the worst case businesses did not grow as much as they wanted to,” he said. 

“Well-known large business families moved abroad in the 60s, 70s and 80s.” 

TetraPak founder Ruben Rausing, Ikea founder Ingvar Kamprad and industrialist Fredrik Lundberg all chose to emigrate before the tax was abolished – taking their fortunes and businesses with them. 

Mr Kamprad returned to the country only after the levy was scrapped. 

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