Resource Use

Sweden planning tax breaks on repair to boost circular economy

Sweden planning tax breaks on repair to boost circular economy
The Swedish government has proposed offering tax breaks on repairs for items like bikes, clothing and dishwashers as a way of encouraging the efficient use of natural resources.

Under changes to tax put forward by the country’s Social Democrat and Green party coalition government, reduced VAT – from 25 to 12 per cent – on the repairs of bicycles, shoes, leather goods, clothes and household linen would accompany a measure to allow consumers to claim back half of the labour costs for the repair and maintenance of white goods like fridges and washing machines from their income tax.

The measures were introduced to the Riksdag, the Swedish parliament, as the government presented its draft state budget for 2017 yesterday (20 September).

By providing tax credits, the government says, labour costs on maintenance would be reduced and consumers would have more of an incentive to repair their products instead of buying new ‘and thus contribute to a more circular economy’.

In 2015, more than 58,000 tonnes of white goods were collected as waste in Sweden, and the government is hopeful that the move will stimulate the Swedish repair industry, despite the estimated cost to government of around £66 million in lost tax revenue.

As well as putting forward the tax incentives, which will come into effect on 1 January 2017 if agreed at a vote in December, the government says it has created a task force to look at and propose instruments to promote reuse and waste prevention as well as beginning an inquiry to map the merging sharing economy.

Per Bolund, Sweden’s minister for financial markets and consumer affairs, told the Guardian that the move would reduce the cost of a repair worth £36 by around £4.50. He said: “We believe that this could substantially lower the cost and so make it more rational economic behaviour to repair your goods.

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

The text of the tax incentives can be found on page 413 of the draft budget plan, downloadable at the Riksdag’s website.

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