UPDATE 2-Swedish PM offers tax cuts, starts election campaign

* Swedish PM hopes for 15 bln sek income tax cuts

* Says to cut tax burden on pensioners further

* Fin Min says no tax cuts if public finances in danger

(Adds detail, PM quote)

By Simon Johnson and Johan Ahlander

STOCKHOLM, Aug 14 (BestGrowthStock) – Swedish Prime Minister Fredrik
Reinfeldt said he hoped to make 15 billion crowns ($2 billion)
in new tax cuts and further ease the burden on pensioners over
the next four years as he began campaigning for a Sept. 19 vote.

Sweden has bounced back quickly from the global downturn and
the economy is set to grow strongly this year. Government
finances are the best in Europe, giving the centre-right
government room to stimulate the economy further.

Outlining the tax cuts, Reinfeldt said there would be fewer
people in work and more on welfare if the opposition were
elected, leading to tax hikes in a nation with one of the
world’s highest tax burdens.

“We chose instead to cut taxes for normal people who work,”
Reinfeldt said, adding 6.1 million workers and pensioners would
benefit from the proposals.

The tax cuts have yet to be agreed by the junior parties in
the coalition government. Reinfeldt and Finance Minister Anders
Borg were also clear that the measures would only come when
government coffers were back in the black, probably in 2012.

“We are not going to cut taxes if it puts public finances at
risk,” Borg told reporters from the deck of a boat in
Stockholm’s harbour.

The four-party ‘Alliance’ coalition ousted the Social
Democrats in 2006 promising to create more jobs while preserving
Sweden’s much cherished welfare state.

The government has cut income taxes by around 75 billion
crowns since then, but the promised increase in employment has
not materialised, due mainly to the global downturn.

However, joblessness is now falling faster than expected and
other indicators point to a rapid economic recovery. Consumer
confidence is at a 10-year high. [ID:nLDE66S0NP]

The central bank expects the economy to expand by 3.8
percent this year before slowing slightly and the opposition is
struggling to find a stick to beat the government with.


The latest poll shows the government ahead of the opposition
coalition after trailing for much of the last four years.

Analysts say the election is too close to call, partly
because smaller parties in both the ruling and opposition
coalitions are close to dropping below the four percent hurdle
needed to get seats in parliament.

Ahead of the election, the Alliance has promised more
welfare spending and privatisations but has been cautious about
further tax cuts, except for pensioners. [ID:nLDE6670UW]

The government has already promised to cut taxes for
pensioners by 5 billion crowns if it wins the election and the
new proposal would increase this to around 10 billion crowns.

In addition, the centre-right alliance has said it would put
an extra 9.2 billion crowns ($1.22 billion) in total into local
government and the education system between 2010 and 2014.

The Social Democrat-led opposition has promised more
spending on welfare, balanced by tax rises. [ID:nLDE6420IL]

Social Democrat leader Mona Sahlin, head of the biggest
opposition party, will give an election speech on Sunday.
(Reporting by Johan Ahlabnder and Simon Johnson; Editing by
Janet Lawrence)

UPDATE 2-Swedish PM offers tax cuts, starts election campaign