Sweden has been enjoying it both ways. The spirit behind Sweden’s elaborate welfare state comes from a quarter of a century of Socialist rule, but the money that supports it is provided by an economy that is almost entirely capitalist free enterprise. Last year Socialist Premier Tage Erlander promised even more welfare benefits on the easy, easy. He proposed legislation to guarantee workers over 67 years old a lifetime pension amounting to two-thirds of their average earnings at the peak 15 years of their working lives. Who would pay? Why, employers would bear the costs, getting tax relief in return, promised Erlander. He added solemnly: “We have no intention of raising taxes.”
But when Erlander’s Finance Minister submitted his new budget, reiterating Erlander’s promise not to raise taxes, he did not explain how the government could cover its expected $490 million budget deficit without an inflationary increase in Sweden’s soaring national debt (up from $2.4 billion in 1951 to $3.8 billion in 1958). Committed to a $90 million increase in welfare benefits (to $876 million) and unwilling to cut the $540 million for defense, Erlander had to abandon his tax-free dream. To the Riksdag he proposed a most unsocialistic solution: a 4% turnover (sales) tax on everything people buy except rent, prescription medicines, transport, fuel and packaging materials, plus a $45 million fuel tax.
Rising last week to fight the measure, Conservative Leader Jarl Hjalmarson demanded on behalf of the largest opposition party that the government instead reduce spending, increase individual contributions to old-age pensions and health insurance. United for once, the Conservative, Center, Liberal and Communist opposition in Parliament tossed out the Socialist tax bills. Premier Erlander then made it a vote of confidence. This put the Communists, on whose seven votes Socialists rely for an overall majority in both houses, on the spot. If they brought the Socialist government down they would be handing power to the Conservatives. Reluctantly, the Communists stridently denounced the 4% sales tax but abstained from voting against it. “If we had not made it a vote of confidence,” sighed Socialist Premier Erlander ruefully, “we would have got nothing.”
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