onsdag 9 april 2008

Swedish welfare system under threat

This is a translation of the blog below, which applies to tax and welfare systems around the world.

The Swedish welfare system is under threat because tax levels are already too high and it is becoming increasingly difficult to fund. It is a good system, but a costly one. Many people cannot earn as much as they receive in benefit. People who work may end up worse off. Every year the cost to the government goes on rising. If people on benefit go to work, they can end up worse off. Why work, they ask themselves? They should not be blamed if they will not work. It is said that 20% of Swedes are out of work, but the official figure is only 5%.

It is the same in the UK. Many people on sickness benefit could work. Some people who receive benefit work at the same time. Fraudulently. They do jobs like painting, carpentry, cleaning, and so on. Or sell drugs. Or go in for crime. The government tries to prevent the fraud but it is an impossible task.

There are bigger swindles that are legal. And worse crime, for example financial crimes that the police can hardly understand. In Germany, rich people send their money to Lichtenstein to avoid tax. In the UK, people deposit their money in Jersey or the Cayman Islands and pay almost nothing. People can live in Monte Carlo and commute to their work in London three times a week. Then they are exempt from tax. But women who work as cleaners and make only £100 a week will be sent to prison if they do not declare it. And if they do, they will get less then their benefit payments. It is unjust. The system is completely stupid.

Really, the main problem is the tax system. It is defective. My uncle is an accountant. He knows all about how to dodge tax and pay almost nothing. In his office there is an entire wall with shelves of books about how to avoid tax. But his clients are very wealthy. They are not cleaners. They are obliged to pay everything. They avoid nothing. or get sent to prison. Why do we have such a crazy system?

The richest men in Sweden is Ingvar Kamprad, founder of IKEA. But he does not live in Sweden because of the Swedish tax system. He lives in Switzerland instead. My neighbour's sister also lives in Switzerland. She is seriously rich. She owns a large farm in the West of England. And woods. And large flats in Central London. And a flat in Switzerland. She and her husband go hunting in their woods and skiing in Switzerland. I expect they pay almost nothing in tax to the UK government. Their office cleaner probably pays more.

What can be done? Nothing. Because the tax system is a boring thing to talk about. So people will not think about it. It causes many great problems. Such as the present financial crisis.

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