DANISH TAXES (2)

For most of the past 30 years, there have been few countries in the world that tax their citizens more than Denmark, but one of them was Sweden. Denmark had high taxes; Sweden had even higher taxes, more than 50% of GDP around 1990 and again around 2000. However, in recent years things have changed. Denmark has taken over the top spot in the OECD's tax list, harvesting 48.2% of GDP in both 2009 and 2010; and the proportion is estimated to have risen since then. Sweden's tax take, on the other hand, is down to 45.8% of GDP and falling, the biggest difference in Sweden's favour for almost 50 years. In terms of public expenditure, the difference is even starker; Denmark is number one in the OECD, Sweden is fifth, behind France, Finland and Belgium.

The Swedish change of heart came about after a severe economic crisis some 20 years ago. Between 1990 and 1994 the Government budget deficit went from a surplus of 4% of GDP to a deficit of more than 13%. Dealing with the crisis required a series of reforms, notably to the labour market. Those reforms have left the country in good stead, Sweden having weathered the financial crisis perhaps best of all the Member States in the E.U.

Denmark has talked about reform in recent years, and has tinkered a bit; but the political will doesn't seem to be there for more radical changes. Perhaps things need to get a lot worse before they can get better. Or perhaps the Finance Minister here needs to get a ponytail, like the guy across the Øresund.

Walter Blotscher