The Press MONDAY, JANUARY 16, 1967. Sweden—End Of An Era?

Press, Volume CVI, Issue 31269, 16 January 1967, Page 10

The Press MONDAY, JANUARY 16, 1967. Sweden—End Of An Era?

The pattern of politics which became evident in Norway in 1965, when a Social Democrat Government was ousted by a Right and Centre coalition after having been in power almost without a break for 32 years, could be repeating itself in neighbouring Sweden. The “toughest Budget for 10 years” may prove to be the last straw for voters who, in recent times, have seen more and more of their incomes absorbecL in direct taxation and spiralling prices, particularly of foodstuffs. In Sweden the Social Democrats have governed for 34 years; but last September, in local elections, they suffered a major reverse.

Although local, the elections were fought almost exclusively on national issues—high taxes, persistently rising prices, and an acute housing shortage in urban areas. All the party leaders took part, with Mr Erlander (Prime Minister for 20 years) seeking to emphasise the boons conferred during the long period of Social Democrat rule. The electorate, however, was not impressed. The voting amounted to an emphatic protest against living costs which put butter and beef beyond the reach of working-class families; against a six to 10-year wait for homes in the towns; against black-market operations which made houses available first to those with the most money; against a turnover tax of 10 per cent extended to food and to medicines not prescribed by doctors. Harshness was expected to characterise the current Budget, because the Government had encountered stiff opposition in its efforts to curb inflation by stabilising wages. The first signs of active discontent appeared about the middle of last year, when the unions issued strike notices over a bitter wage dispute and the employers countered with a lock-out threat. The crisis was resolved by a three-year wage agreement estimated to cost the country £166 million. Then pilots of the Scandinavian Airlines System and teachers and civil servants went on strike for higher pay, and won new agreements. The teachers will have thejr salaries raised by about 33 per cent during a three-year period.

The Swedes appear to have cause for complaint at the high level of direct taxes, apart altogether from those in the indirect category. Examples show that for the semi-skilled factory worker direct taxes account for approximately a quarter of gross income. In the professional class, direct tax amounts to about 43 per cent of gross income, rising still higher if the wife is also employed. As elsewhere, the Swedish housewife is the hardest hit. During 1965, purchase tax, affecting practically all goods, including food, was lifted from six to 10 per cent. Not surprisingly, the housewives are threatening action—as in New Zealand—in an endeavour to force price reductions; but so far the direction their protest might take has not been indicated. The current Budget, which could bring the crisis to a head, was expected to lift purchase tax to 13 per cent, the level already reached in Norway.

With a wave of discontent sweeping the country, it is a question whether the Government can last until the autumn of 1968, when a General Election is due. After the local election setback, Mr Erlander said the possibility of an early appeal to the country could not be ruled out. Reaction to the Budget might well force the Prime Minister to seek a dissolution. If he does, the Opposition parties, Liberal, Conservative and Centre, will be well prepared. Encouraged by the voting in Norway, they presented joint candidates for local body office in some areas last September, and have already agreed on a common policy for the General Election. The portents point to a Social Democrat defeat at the polls for the first time in 30 years.