Sweden’s red-green government wants to cut VAT on repairs of consumer goods such as washing machines and bicycles. The move is meant to encourage reuse and discourage waste. André Anwar reports from Stockholm.
These days it is cheaper to buy something new than it is to repair it. This is even the case with cameras that have only a slight defect – which is likely what some manufacturers even want, as consumer protection groups have long been criticising.
In a country like Sweden with its high labour costs, it is often prohibitively expensive to repair broken goods. Most people would rather throw something away and buy the same product again directly from China, infamous for its low wages.
Sweden’s government is now taking a unique approach to curb the country’s throwaway culture. Last month, its parliament presented a new bill that would cut VAT on repair services of all kinds from the current 25 per cent down to 12 per cent.
Repairs can be deducted
Private individuals would also be allowed to deduct half of the labour costs of repairing household appliances such as refrigerators, microwaves, dishwashers or washing machines from their own income tax. This would subsidise repairs and curb the waste of environmental resources associated with new purchase.
Market studies suggest that repair services could significantly lower their prices through tax cuts. There is already very strong competition in this sector, for example from shoemakers, whose labour costs are comparable to those of repair services.
Greens win over Social Democrats
“We see that people are becoming more and more committed to saving resources and reducing waste. From the side of the government, we want to encourage that things are repaired and last longer,” said Per Bolund, Sweden’s minister for financial markets and a member of the Green party.
The Green party was able to win over the Social Democrats, the senior partner in the coalition, with their idea. “It’s better to repair something than throw it away,” said the Social Democratic finance minister Magdalena Andersson.
Opposition sees no improvement
The repair services whose VAT would be more than halved include shoes, leather goods, bicycles, clothing and other textiles.
The tax cuts would cost the government around SEK 270 million per year. Added to this would be the SEK 190 million for the income tax deduction for the repair costs of household appliances.
The centre-right opposition, which tends to support tax cuts and smaller government, finds the idea good in principle. But it warns that the left-leaning government will increase tax burdens elsewhere, thus neutralising the desired effects.
Cutting consumption emissions
As the Guardian reported, the proposal is part of a shift in the government’s efforts on reducing carbon emissions produced domestically to reducing emissions linked to goods produced abroad.
While the country and its 10 million inhabitants have cut annual carbon dioxide emissions by 23 per cent since 1990, emissions linked to consumption continue to rise.