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Borg wants to stop tax evasion from companies providing welfare services in Sweden.

Wednesday, 19 October 2011
Sweden’s Finance Minister Anders Borg would quickly put an end to private equity organisations providing welfare services, the opportunities to evade taxes in Sweden.
“Today we want venture companies operating in areas such as education and health care that has interest rate structures that allows them to avoid taxation in Sweden and the taxes instead goes to the Cayman Islands or other tax havens. It is simply unacceptable. We must put a stop to,” said Borg at a press briefing.

Borg also said that the Conservatives Moderate party want to increase the pressure on the labour unions and labour interest groups so that they can make it easier for young people to gain a foothold in the labour market. There is reason to hold talks with the TCO, Saco and LO about it, according t the minister. These are the leading labour union groups in the country.


According to Borg, this can be done through some form of restriction on interest deductions for private equity firms.
“We are working with it. The company tax examination is checking if it should be during the next year to come up with suggestions relating to that. But we must get away with the nuisance that, as they are operating an important welfare activities in a form of using private company to deliver, they must not fixed solutions which would means that taxes will never reach the state,” said Anders Borg.

Prior to this, the Moderate party which has been privatising social and welfare services in Sweden in the most recent years have come under intense criticism from the opposition. One of the points of the criticism has been that companies welfare services such as school are strong private equity firm which have made massive profits and transferred the money abroad to tax havens or carry out other forms of tax management. This looks like these companies have been sending tax payers money broad.

The second point has been that these companies that provide the welfare services have been proving poor quality because they have to cut cost by all means by employing fewer service delivery approaches. Reports have in the past months suggested that since the Swedish welfare services became privatise since 2004, quality have not improved. For example, education attainment has not been the best, even though more Swedish schools are run by private companies. Also waiting list in hospitals have been the longest and the amount of hospital bed reduced immensely.

Besides trying to make big the above companies’ pay their taxes in the Sweden, Borg said the government, want to improve access to young people into the market and this is to be done  via such agreements such as on apprenticeship  - on the job training,  be willing to help with temporary reductions in employer contributions.
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