A new report from the Swedish Tax Agency “How has the Covid-19 pandemic affected tax revenues and tax revenues” studies data on companies ‘payments of taxes and wages and income tax returns for 2020. The data base includes information from the new register of companies’ monthly employer declarations which provides a unique opportunity to study the effects of the pandemic.
The analysis shows that companies’ sales and VAT payments fell sharply as a result of the pandemic. On average, sales decreased by 8 percent and outgoing VAT by 7 percent in 2020. The decline was greatest among companies in municipalities where the spread of infection was extensive.
Tax revenues from several excise duties were also affected. For example, the effect on deductions for electricity tax for industry was significant during large parts of last year with a decrease of 8 percent last summer.
– This indicates a decline, especially in the manufacturing industry. The aviation tax decreased sharply, during the summer the reduction was almost one hundred percent. Revenues from taxes on alcohol, on the other hand, increased by 14 percent last summer, says Nikolay Angelov, report author and analyst at the Swedish Tax Agency.
The paid employer contributions decreased by 9 percent and the labor income by 4-5 percent compared with the first two months of 2020 before the pandemic broke out in Sweden.
Income disparities increased, mainly due to higher unemployment and reduced labor income among low-income earners, especially among young part-time workers. Full-time middle- and high-income earners were not affected as much. A partial explanation for this is the support packages, especially short-term support and adjustment support, for employees and companies that were introduced in 2020.
Without the support packages, the average reduction in earned income would have been almost twice as large, as would the increase in income distribution, says Daniel Waldenström, author of the report and a member of the Swedish Tax Agency’s scientific council.
Women’s earnings fell more than men’s. The difference is mainly due to a larger drop in income among part-time working women with low earnings.
The Swedish Tax Agency’s press release