To combat its ‘throwaway consumer culture’, Sweden has announced tax breaks on repairs to clothes, bicycles, fridges and washing machines. On bikes and clothes, VAT has been reduced from 25% to 12% and on white goods consumers can claim back income tax due on the person doing the work.
The incentives are intended to reduce the environmental impact of the things Swedes buy. The country has ambitious targets to reduce greenhouse gas emissions, but has found that the impact of consumer choices is actually increasing.
‘The scheme is expected to cost the state some $54 million in lost taxes, which will be more than outweighed by income from a new tax on harmful chemicals in white goods,’ says Alexander Starritt of the World Economic Forum. ‘Moreover, Sweden’s economy is growing strongly and the government has an $800 million budget surplus.
‘I interviewed the man behind the scheme, deputy finance minister Per Bolund, a member of the Green party and a biologist by training. He spoke about nudging people towards better choices; creating jobs for skilled manual workers; and Sweden’s six-hour working day.
Will these tax breaks be big enough to change people’s habits?
I think many of us have had a bike standing around broken and we don’t fix it and then start using other modes of transportation. This will expand the number of companies giving these kinds of services, so it’ll be easier for consumers to have things repaired.
And sometimes you can be surprised by how a small change in fees can really change behaviour. We’ve seen that in the congestion charging here in Stockholm, how a fee of only 10 or 20 krona ($1-2) can really change the patterns.
And in white goods, the tax break is actually quite substantial since most of the cost of repair is actually labour, so it can really make a quite big difference.’