While government in Sweden is far larger than in the UK, the gap has been narrowing fast over the past decade. And in certain areas, the country is not as high-taxing as you might think - the corporation tax rate has stayed at 28 per cent for a number of years. Now, as the FT reports, the Swedish government's autumn budget will cut the rate of corporation tax to 26.3 per cent from next year, meaning that Sweden will now have a lower rate of corporation tax than Britain. The FT continues:
"The budget marks a turning point for Mr Reinfeldt's administration, which was elected in 2006 after ousting the leftwing Social Democrat party after 12 years.
"It pledged to reform the famously generous welfare state and give the free market a greater role, freeing up resources to boost employment and reduce taxes.
"The past two years have brought a series of reforms in line with election promises, but have come at the cost of its popularity. It now languishes some 20 points behind the Social Democrats.
"The government has admitted it expected to suffer in the opinion polls during the first half of its term as it implemented changes to the welfare system.
"But it believes the second half will see a revival as it puts in place more popular measures such as increased welfare spending and tax cuts, financed with the country's substantial budget -surplus."
The Swedish government has it right - tax cuts are good for the economy and are popular. They would be good for the economy and popular in Britain too!
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