Why High Taxes In Sweden Finland And Denmark – Finland, Sweden, and Denmark are considered as the countries that pay The highest taxes in the whole of Europe and some say in the world. There are reasons why these countries have such high taxes.
Why are taxes so high in Sweden, Finland, and Denmark?
Taxes are too high in Finland, Denmark, and Sweden, and there are several reasons why the taxes are high. Let us look into those reasons.
Higher taxes due to elite education system:
All three of these countries of Europe provide free education to their residents. When a parent admits their child in schools, they do not need to worry about paying their school fees as the government has waived off school fees for these three countries. It is the same case with colleges as a student does not need to pay for them too.
Three of these countries have given great importance to their education. Due to this reason, Finland, Denmark, and Sweden have made higher education free for their residents. Not only the resident but students coming from other countries are also provided with free education. These reasons also give us the answer as to why the education system of these countries is so elite when compared to the education system of the United States of America.
Schools in Finland Denmark and Sweden hire top-class teachers for their students that are both interactive and helpful towards them. It also proves why three of these countries are the happiest in the world.
The student is provide with workers that can clean up
The schools provide extra facilities such as toys for the little children. Schools in these three countries believe that students from class one to five should be though practically by using toys or physical letters instead of books. As a result, they bring in supplies for their smaller students rather than making them buy books. The student is provided with workers that can clean up if they cause any mess.
Students of the middle class are given logical books and books that help them in analytical thinking. They are also provided with books that increase their knowledge, such as basic science books or math books. Most of them have a backup psychologist that helps out students if they face any pressure due to studies. Schools also provide other facilities such as lunch and uniforms to students.
Higher education being free for students and international students is a very high stance make these countries. They not only provide free education, but they also give quality education. However, according to the report, only 33 percent of applicants get into these universities.
The international students that come from abroad
Universities give other facilities that are necessary for students. The international students that come from abroad are provided free dorm rooms to live in. Some Universities also give free electronic gadgets that help students in studying. They are also provided free food for the time they are studying in the university. After completing their education, they are told to move out.
From all these facilities, we can conclude the education system is elite. All the facilities provide the schools and universities are not paid for by the parents of the students. The government has to pay for all of them. Although Finland, Sweden, and Denmark provide a positive image to the world by making education free for all but these become a burden for the government as it requires a lot of funds to fulfill such facilities. As a result, the government of Denmark Sweden, and Finland imposed high taxes on their residents, so that they could collect funds and pay for the free facilities provided by the schools. However, we should keep in mind that we are talking about state-owned education institutes.
Higher taxes due to pension payments:
Finland, Sweden, and Denmark all provide pensions to the people who are eligible for them. Individual pension plans are made for people in categories. These countries were involved in some historic wars such as the world war. Soldiers that fight in those wars are taken care of the government. The government of these three countries pays for every expense of these veterans. They also provide them with monthly pensions that are enough for them to lead the rest of their lives in peace.
Moreover, the government of these countries takes responsibility for handicapped children that are not able to work or receive an education. The government pays a monthly pension to these children so that their parents can help in providing medical treatment for them. Moreover, they also provide other incentives such as special education schools free of cost for these children.
The benefits of payments after retirement
Other than that, the government of Denmark, Sweden, and Finland provides pensions to employees who have worked for the countries. However, this does not mean that private employees do not enjoy the benefits of payments after retirement. They are also provided with pensions, but it is slightly less than employees who are public workers. There are a set of conditions that can affect the number of monthly payments.
The law of their countries states that employees who retire before 1975 would receive a pension amount equal to 26 percent of the salary.
The employees who retired after 1975 would receive a pension amount equal to 36 percent of the payments. They further state that employees working for the private sector will receive salaries up to 60 percent and these employees who worked for the government will receive pension amounts equal to 66 percent of total income.
All of these expenses are taken up by the government. Pensions account for sums of money that have to be paid to the public on time. As a result, the government sets higher taxes to increase their tax revenue and pay for this pension.
Higher taxes due to provision of family aid:
The government of Finland, Sweden, and Denmark provides family aid to residents of each country. These family aids can vary from the ages of children or the type of situation the family faces. The government of the three countries made it compulsory to pay all children of these countries under the age of sixteen a monthly allowance. If the parents of the child are wealthy, the children would still receive their payments.
Moreover, a child who has divorced parents would receive an extra amount. The amount would be paid to the person who was declared as the permanent caretaker of the child. The amount paid to the caretaker can not be used for personal means.
Working parents who have no time to take care of their baby are provided with a nanny whose salary is paid by the government. Furthermore, the government also provides maternity aid if a woman is pregnant.
Therefore, all these facilities require funds, and thus the government taxes the wealthy residents so that they can fulfill these necessities.
Higher tax rates due to welfare services:
All three states provide welfare activities for the public and due to this reason; social workers also double from the 1960s to the 1980s. The government provides free housing to those people who need it. Moreover, the government provides the public with free psychological services, so that they can go to them for free and discuss their problems with them. Due to this reason, these three countries came in the top happiest countries of the world.
Rehab centers were established to save the youth from such destructive practices. They also provided old-age homes for the elderly and marriage counseling for couples who face difficulty maintaining their marriage.
Just like the other facilities provided by the government, these also require funds as the governments have to pay for maintaining these institutes as well as pay for the staff members that work there. As a result, the government increases its taxes.
Higher taxes due to free sickness insurance:
Denmark, Sweden, and Finland provide their people with free sickness insurance if they fall sick. Sickness insurance covers all costs related to a sick person. The insurance will cover all medical costs and also all the hospital bills if the patient is serious and is admitted into the hospital.
The condition for free health insurance is that the person has to buy medicines from government-owned pharmacies and the treatment from hospitals owned by the government. These expenses are taken up by the government to support these; the government imposes taxes to collect funds that help in paying for the free sickness insurance.
Higher taxes to pay back debt:
All these three countries spend a lot on the facilities they provide to the people. Moreover, sometimes the government falls short for recovering their facilities, so they loan a couple of dollars from rich countries to complete their expenses. The previous government in these countries have loaned a lot of money from other countries. For example, Finland alone has a national debt of 170 plus billion dollars. This money was loaned for purposes such as war, economic failure, or even to upgrade the military system. Most of the money was loaned for development purposes as these countries were underdeveloped and need money to help them progress.
The corrupt government did not pay back those loans so the interest over those loans kept on accumulating, and thus it leads to higher debts. Moreover, the government does not consist of businesses like private people to transfer their income to pay for those loans.
The governments have only two options. The first option is to sell an asset of their country to a private organization in exchange for money to pay back those loans. But that would mean losing an asset of the country, and it would not be considered a positive political move. So, as a result, the governments have no option but to raise their taxes. The extra income earned by taxes is used in paying back loans.
Higher taxes due to provision of workers compensation:
Sometimes when workers are on a job, they may face accidents. These accidents can lead to three possible cases. The worker might die, the worker might be injured but can recover after treatment, or the worker might be disabled for life.
If the worker is injured but can be cured by the treatment, the government will pay for all his expenses. If the person dies or faces a lifetime disability, the government pays 85 percent of his salary as monthly compensation for the worker or his family. The government has to impose additional taxes on its residents if calamities occur and many workers are affected.
Higher taxes to improve the economy:
Sometimes the government taxes certain items for a reason. These products are the ones that are imported. Sometimes the country suffers great economic damage when local products manufactured by the local industries are not used by the people. So what happens is that tax revenue is decreased.
Some people say they do not want to use local products and want a change, so they shift towards using imported products. The economy starts to slowly and gradually collapse as people focus more on the imported economy.
So the government decides to impose heavy taxes on imported products. The government reduces the buying power of the public and restricts them to use locally manufactured goods. It brings two benefits to these governments. Number one benefit is that the heavy taxes would give extra funds to the government and the second benefit is that it will save the economy from collapsing and promote more production.
Moreover, it will also reduce the import bill which also contributes to the national debt of the country.
Higher taxes due to less population:
Denmark, Finland, and Sweden have low populations. Due to this reason, they provide international countries with multiple packages, so that they can start living in these countries where the population is extremely low in comparison to the population of the United States of America. With short population, there is a lot of area with each of these countries. It means that they have fewer people per square kilometer.
A smaller population means that there will be fewer people to pay taxes, and thus the government will receive lesser funds. So the government has no choice but to raise taxes on those few people to pay for the expenses of running the government.
Additional taxes for military purposes:
The geographical locations of all these countries are vital if we politically look at them. These countries were not well known to the world 10 15 years back. Sweden, Denmark, and Finland are cold countries, and they are also rich in minerals and resources such as wood and crude oil. Moreover, they also have mountains with expensive stones such as diamonds in them.
All these minerals and resources make all three of these countries vulnerable to attacks from their neighboring countries. As a result, these countries need military equipment to improve their defense system and protect their people from military attacks. These military expenditures do not stop, and the government has to impose additional taxes on their people to pay for the military expenses.
Which country is the ideal for immigration?
Before immigration, you have to plan accordingly and look into every detail of each country.
First, let’s look at Denmark’s. The immigration laws for Denmark are much stricter than in Finland and Sweden. Denmark has a flexible labor market if compared to the other countries. Danish people are more or less like Americans, and they are a little aggressive when it comes to business and are considered top-grade salesmen. Denmark also has a geographical advantage over the other two countries as it close to points south.
Businesses in Sweden focus more on long-term advantages and so they are considered as the leaders of business in the Scandinavian region. Sweden has better relations with other neighboring countries, and so it protects it from any military attacks. Sweden is a great country, but it does not give importance to refugees and focuses mainly on its residents. They are great thinkers but are stubborn most of the time. It is a great country to live in but not for more than 5 to 6 years.
People in Finland are much more grounded people, and they concentrate more on their work. They are great at doing business, and so they can be compared to Swedish people.
Furthermore, the laws and tax rates of the three countries are almost the same, so it will not be a problem.