Sky’s the limit

Stockholm

Sweden, which already has the steepest taxes in Europe, may have to raise taxes even higher, the prime minister said this week. Goran Persson said that such a move could be necessary to protect the “Swedish model” of the welfare state. Swedish baby boomers will soon be retiring in huge numbers, Persson noted. If taxes are not raised, he said, boomers will not be able to count on free, high-quality health care into their declining years. Many Swedish economists panned the proposal, arguing that higher taxes would drive away businesses and discourage people from seeking work. The government countered that despite high taxes, Sweden’s economy has grown faster than the E.U. average for the past 10 years. Sweden’s tax burden is more than 50 percent of gross domestic product.

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