In a hilarious confirmation of the power of international taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. competition, Forbes.com reports that Swedish tax authorities have been dodging Sweden’s notoriously high tax burden by outsourcing production of television ads to low-tax Estonia. Ironically, the ads are designed to encourage Swedish taxpayers to “pay on time.”
The Swedish tax authority has admitted it produced a television advertisement encouraging taxpayers to pay up on time, in low-cost Estonia, partly in a bid to escape high Swedish taxes, reported the Local.
The ads, featuring popular comic Johan Wahlstroem, would have cost 50 to 100 pct more to make in high-tax Sweden than they did in Estonia, said Bjoern Tennholt at the Swedish Tax Authority (Skatteverket).
‘Of course, Sweden is a high-tax society,’ said Tennholt.
He admitted the high cost of doing business in Sweden had also led the tax office to make films in Barcelona and Majorca, and print brochures in Finland.
According to the latest Eurostat figures Sweden has the highest tax burden in the EU at 50.5 pct of GDP in 2004, up from 50.2 pct in 2003.
The average tax rateThe average tax rate is the total tax paid divided by taxable income. While marginal tax rates show the amount of tax paid on the next dollar earned, average tax rates show the overall share of income paid in taxes. for the 25 EU countries was 39.3 pct of GDP in 2004 versus 39.5 pct.
The rapidly growing Slovakian, Polish and Estonian economies also have the lowest tax burden in the EU.
According to a report in Dagens Industri, Sweden has lost 60,000 manufacturing jobs since 2001 as Sweden’s blue chip manufacturers—like the Swedish tax office—opt to produce in lower cost countries.