EnglishPatriot

I've read countless articles about how high Nordic tax rates are, yet having done a bit of research this doesn't seem to be the case.

For example, the income tax for someone in Finland earning between 23,900 and 39,100, ie an average wage, is 17.5%

Add to this municipal tax, which for arguments sake, lets say Helsinki, and that's another 18.5%.

So put simply, the average marginal tax rate that a Finn pays is around about 36%.

Compare this with the UK, where someone on the lower rate of income tax earning up to £35,000, including National Insurance pays about 32% tax and if you include your employer's NI contribution, that's more like 45%.

For higher rate earners, ie, those earning in excess of £35,000, you are looking at a tax rate of more like 52%, or 65% including employer's National Insurance.

Bare in mind that university fees are free in all Nordic countries, so British graduates have to add an extra 9% to their income tax bill that Nordic graduates don't.

When you weigh it all up, income tax in Nordic nations doesn't look much worse than the UK and to think the media constantly try to tell us that the UK is a low tax country!

Catchafire

Try living in Sweden and paying 25% VAT on everything. Then you have taxes on alcohol, petrol, capital gains

EnglishPatriot

VAT in the UK is 20%, so lower but not hugely so.

Also, as far as I'm aware petrol is cheaper in Sweden than it is in the UK.

Alcohol is cheaper in the UK, but on the other hand cigarettes are much more expensive in the UK.

I'm still not convinced Nordic nations pay substantially less tax than British people do overall. British tax is just more hidden and less upfront.

Blackladder

According to statistics from OECD (latest I could find were 2010) total tax burden for Sweden was 45.8 per cent of GNP while the total tax burden in the UK for same period was 35 per cent.

EnglishPatriot

The base rates might be higher in Sweden than the UK, but there are a lot more hidden taxes in the UK that Swedes get included in their basic tax payments.

One big example is university education. Swedes get free education, whereas British students have to take a student loan and have 9% added to their tax burden until they pay it off, which depending on wage could hypothetically take 40-50 years.

So if you're a graduate in the UK, that average tax burden goes from 35% to 44%, whereas a Swede's would remain unchanged.

I believe that the UK tax system is designed to be cloak and dagger and dishonest and make it appear that you aren't paying that much to the government, because it is so fragmented.

I doubt employer's NI is included in that 35% tax burden, which is another 13.8% on top of your income tax and employee NI contributions.

But yeah, the British keep believing that they are a low tax nation because most British people have no independent thinking and independent analysis skills beyond what they read in the papers and hear on TV.

The British media frequently tell us how we "only" pay 20% tax, compared with Sweden where they pay 50% tax (the frequently cited number). The 20% figure is bullshit because it doesn't include National Insurance contributions, which conveniently are often omitted by the British press when discussing income tax.

Blackladder

Swedes have been taking loans for studies since the 1960s. I took a loan when I studied there and was paying it off until I was 50. Studies for Swedish Citizens and others holding permanent Residence permits are free at University level, but accommodation most definitely is not. Remember also that despite this high level of taxation, you still have to pay to go to the doctor's, still have to pay for your medicines and still have to pay for your hospital beds. The OECD is an independent body and does not simply publish figures presented to them by any government.

edp

If you are good at 'tax' then I understand that you can make swedish taxes work quite well in your favour. I know a couple of examples - that incidentally seem to favour those with money - such as you will get a tax reduction on your mortgage interest (you get tax reduction on debt interest in general i believe). You can get tax relief on doing work on your property - something bidrag.

I find it all a bit nuts, the general idea is 'we take as much as we can at any given opportunity, its your job to work out how to get some back'. If you are stupid/foreign (one and the same thing to a Swede), then it will seem like a hefty burden.

For example, I charge my client 3200 SEK + 800 SEK for MOMS - I pay the MOMS to government, she claims it back. I buy a computer for 12500 SEK. I claim 2500 SEK Moms back as it is for business use...OR I buy the same computer from somewhere else in the world for 8000 SEK. I then feel terrible because i have been a bad citizen and there are probably government workers in Stockholm who will now have to make do with 1 week in Thailand instead of 2.

edp

Tax figures are slightly irrelevant in my opinion. Good political devices. It would probably be easier for all when you got a job if you were just told what you will get in your pocket.

The question is: what do you have in your pocket? what does it cost you to live? what services are available to you? how much do they cost? what are your consumer priorities?

A person's ability to manage his money far outweighs a few percentage here and there. If you inherit £100000 at some point in your life - which a good proportion of people do - then a level playing field of taxation is largely, personally, irrelevant. Wealth is not the same as income and taxation on wealth is less understood but probably more important. Life is not fair, taxes don't significantly challenge that.

Here is an interesting article. The chronic wealth inequality in Sweden was actually created by the social democrats. Who'da thunk it?

http://super-economy.blogspot.se/201...nequality.html

OuluPulu

Hei!

I live in the north of Finland, and have done for several years.

I guess I pay about 30% tax - that's including pension, healthcare, local authority and government. No extra hidden or unexpected taxes, that's it.

I'm a non-car owner, but was in the UK as well.

Overall, I think I have way more money left at the end of the day than I ever did back in Blighty. I haven't sat down and worked it all out, but it seems to me that the cost of living and home ownership is a lot less in Finland than it is in the UK.

Gordon Barlow

As in every place, the cost of living depends on how you live - what you regard as essential and what not. My son has lived in Norway for ten years now, a semi-reformed hippy employed at what he assures me is close to the basic wage. He lives in a fairly simple cabin (hytte) in a forest outside Oslo with his girlfriend and regular visits from his kids, runs a car, pays his taxes, union dues and child support, and doesn't really want for much.

Last August I blogged about his accommodation requirements ("Not the Swiss Family Robinson"), which are modest but adequate. His mother and I stayed with them all for two weeks last summer, so conditions couldn't have been too bad! We pay for his two daughters to go to a private school, for USD700 or so a month.

The Norskies have pretty much achieved the perfect work-life balance, as far as I can tell.

edp

What people forget to take into account is the tax allowance. If I earn only £7000 in the UK thats what I get more or less. That is a very handy arrangement if for example you are setting up as self employed or you need to cut back on hours for some reason. In Sweden if you earn 70000SEK you will end up with something like 50000SEK.

sun67

The overall cost of living in Sweden is more expensive - almost everything you buy is more than its equivalent in the UK (not sure about petrol, I will take your word for that, although it does seem unlikely). For example, I buy most of my clothes and many other things from the UK - even with postage factored in, it is still much cheaper to do it that way.

magpie61

EnglishPatriot - I think you're right, at least for Finland. I moved there from UK a year and, although tax is higher, it's not extortionately so. And once you add in free childcare, free schools (best in world), lower cost of accommodation, I reckon it it comes out pretty equal.

EMR

Friend in Swededn pay up to 55% but they get tax relief on part of their mortage plus of course many other benefits which you would have to pay for in the UK.
That does not mean thay are happy with their high tax bills.

hatecold

Childcare is not free in Finland. It is cheap, but not free. I think the lowest rate is about EUR 200 a month.