Wednesday, March 18, 2009

The face of opportunism

Probably the only thing more annoying than a stupid politician is an opportunistic one. You know, the ones who say one thing one day, and then the complete opposite the next day, all based on the public opinion at that particular day. Or, as the Merriam-Webster online dictionary says it:

a: exploiting opportunities with little regard to principle or consequences "a politician considered opportunistic"

Well, the Swedish Socialist Democratic party sure hit new highs, or lows, when it comes to opportunism as politicians Thomas Östros and Carin Jämtin announced today that if they win the next election they will revert the changes to the housing tax that were put into effect by the sitting government just last year. To put it short, these changes basically impose an interest rate on any profit you make when selling a house, provided you decide to postpone payment of the tax that you would otherwise have to pay (28% of the profit, if I remember correctly). In other words, you can pay your tax on the profit immediately and be done with it, or you can postpone it, investing the money in a new house, for instance, and then pay an interest rate on that money (on 1 million SEK the annual interest rate is around 5000 SEK, if I remember correctly). Of couse, no one likes to pay taxes, so the general public, who have been used to postponing this tax indefinitly and for free, is not very enthusiastic about this.

Now, here's the fascinating thing about Östros' and Jämtin's attack... While the new interest rate is annoying, the total tax burden for most home owners has decreased significantly under the new government. When Mr. Östros and his "red army" ruled Sweden home owners would pay an annual tax of 1% of the estimated value of the property, meaning that people living in Stockholm (where housing prices are high) would end up paying tens of thousands of SEK each year of money that simply wasn't was based on an estimated value, and it didn't matter if the home owner was a retiree with little or no money. "If you can't afford to pay the tax, sell your house and move". Mr. Östros had no problems with that only a few years ago, but he pretends to be appaled by this new and much more tolerable tax. In fact, the man who threw people out of their homes only a few years ago actually has the nerve to use Stockholmers as an example of people who will be hit unreasonably hard by this interest rate.

The sitting government actually changed the Socalist Democratic party's grotesque tax on housing so that no home owner will pay more than 6000 SEK annualy. Annoying, definitly, but not enough to force people out of their homes. And yes, they added the "interest rate" on the profit you make selling your house. The big difference here is that you have actually made a profit - you've got the money to pay the tax.

This part, that is actually reasonable if you think about it, is what Thomas Östros and Carmin Jämtin want to revert. Go back to paying 40.000 SEK a year (as opposed to a maximum of 6000 SEK today) just to be able to live in your own house. But at least you'll be able to postpone that tax on the profit indefinitly. Sounds like a sweet deal, doesn't it?

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