Sweden to give tax break for repairs to change its wasteful consumer culture

Posted on 5 Oct 2016 by Aiden Burgess

The Swedish government has proposed to change the country’s consumer cycle from one of a disposable culture of ‘buy, use, throwaway, buy’ to a more rational one of ‘buy, use and repair'.

To try to achieve this dramatic change in consumer culture and behaviour, Sweden’s ruling Social Democrat and Green party coalition has submitted proposals to parliament to slash the value-added tax (VAT)  rate from 25% to 12% on repairs to bicycles, clothes and shoes.

The proposed new law to tackle the countries wasteful consumerism will also see Swedes be able to claim back from income tax half of the labour costs on repairs to appliances such as refrigerators, washing machines and other white goods.

The tax cuts from slashing the VAT rate are expected to cost the country around $54m per year, which is expected to be paid for by the estimated $233m set to be brought in by a new ‘chemical tax’, which would tax the resources that go into making new goods and computers.

The new tax breaks for repairs are set to extend increase the lifespan of Sweden’s bicycles, clothes  and shoes,  and at the same time reduce the consumption of materials and cut greenhouse gas emissions.

The new tax break for repairs aims to further reduce Sweden’s CO2 emissions, which have been reduced by 23% annually since 1990, with the country already generating more than half of its energy from renewable sources.

Sweden repairs tax breaks to also stimulate repair industry

Sweden’s minister for financial markets and consumer affairs and one of six Green party cabinet members proposing the tax breaks, Per Bolund, said the changes could be used as an incentive to repair goods and subsequently stimulate the countries repair industry.

“We believe that this could substantially lower the cost and so make it a more rational economic behaviour to repair your goods,” he said.

Bolund estimates that the VAT rate cut from 25% to 12% will reduce the cost or repair by about 12.5%, which it is hoped will be enough to stimulate Sweden’s repair industry.

Bolund also said the tax break policy reflected a global shift for consumer goods to last longer through greater maintenance and repair, rather than just as considered as disposable items.

“I believe there is a shift in view in Sweden at the moment,” he said. “There is an increased knowledge that we need to make our things last longer in order to reduce materials consumption.”

The proposals to slash the VAT rate to repair items such as bicycles will be presented to Swedish parliament as part of the Social Democrat and Green party coalition government’s budget proposals which, if voted through in December, will become law from January 1, 2017.