Background information

Due to the current cost of energy and raw materials, the viability of many agricultural companies’ operations in Sweden is threatened. The situation has been exacerbated by the war in Ukraine. To support the companies’ survival as well as to secure continued domestic food production in Sweden, the government has decided on financial support for the agriculture, forestry, fisheries and aquaculture enterprises in terms of tax reduction on diesel. The tax reduction increase requires an amendment in the The Act on Tax on Energy 1994:1776 (Lag om skatt på energi).

This measure is closely linked with Additional support for agricultural and fishery enterprises , as they are both part of the same package.

Content of measure

The government proposed in their spring budget amendment to temporarily increase the tax reduction for diesel used in agriculture, forestry, and aquaculture by 2 SEK per litre, on top of the pre-existing tax reduction. The estimated fiscal cost was SEK 700 million.

The measure is part of a support package valued up to SEK 1 billion. The package also included a direct subsidy to some agricultural producers .

Due to war in Ukraine, prices for agricultural inputs continue at a high level. Thus, the government of Sweden has expanded the tax reduction on diesel making it valid retroactively. Thus, eligible producers will get an enhanced tax refund on their diesel use over the period 1 January 2022 to 30 June 2023. The amendment is planned to enter into force on 1 July 2022. The tax refunds are expected to have a fiscal burden of SEK 400 million.

A proposal of additional hand-outs to the industry was made due to the war in Ukraine .

Use of measure

The government estimates that around 26,000 businesses in the agricultural, forestry and aquaculture sectors are covered by the reduction, most of which are small enterprises.

In March 2023, when the measure was extended until the end of the year, the government announced that the tax relief would affect around 25,000 businesses.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Sector specific set of companies	Does not apply to citizens

Actors and funding

Actors	Funding
National government	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Direct consultation outside a formal body	Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Peak or cross-sectoral level

Involvement

Social partners were invited to leave a statement.

Views and reactions

The Confederation of Swedish Enterprise [Svenskt Näringsliv] approves of the measure and argues that from a climate perspective it is well balanced considering that Sweden otherwise would have to rely on food imports.

Sectors and occupations

This case is not occupation-specific.

Sources

• 14 February 2022: Support package for agricultural businesses in the spring budget for 2022 (Stödpaket till lantbruksföretag i vårändringsbudgeten för 2022) (www.regeringen.se)
• 03 March 2022: Statement from Confederation of Swedish Enterprise (Remiss från Svenskt Näringsliv): diesel (www.regeringen.se)
• 09 March 2022: Government decides to extend tax reduction on agricultural diesel (www.regeringen.se)
• 25 April 2022: Additional billions to Swedish Agriculture and Fisheries (Nya miljarder till lantbruk och fiske) (www.di.se)
• 25 May 2022: Support package to agriculture and fisheries due to the Russian invation of Ukraine (Stödpaket till lantbruksföretag och fiskerinäring med anledning av Rysslands invasion av Ukraina) (www.regeringen.se)