Tidö Parties Clash Over Budget: Child Benefit Increase vs. Reduced Food VAT

A heated debate continues among the Tidö parties over the best measure to support financially strained families—whether to increase child benefits or reduce food VAT. A final overnight negotiation is expected before Finance Minister Elisabeth Svantesson (M) presents the upcoming election budget on Thursday.

On Thursday, Elisabeth Svantesson will traditionally meet the media at the Prime Minister's summer residence, Harpsund. She will provide her perspective on the economic situation for the election year 2026 and outline the available reform space.

In advance, she has promised an expansive budget focusing on households and growth. This has pleased representatives of the four Tidö parties, who enter the election campaign with a significant opinion poll deficit.

Expected measures include tax cuts on income and energy, and internally, the four parties believe Svantesson will propose a reform space of 45-70 billion kronor. This contrasts with the National Institute of Economic Research's assessment that there is room for a 34 billion kronor investment.

Could Be Eaten Up

Although several sources from Expressen suggest that most negotiations have proceeded without major issues, it is clear that there is still one unresolved issue expected to require a final overnight negotiation. This concerns the Sweden Democrats' demand for reduced food VAT.

Jimmie Åkesson and his party members argue that cheaper food would benefit all households, not just those with children, and have therefore opposed the increased child benefit that both the Christian Democrats and Liberals support.

All negotiation groups are currently considering the potential effects of both measures, both directly on households and on the economy—and on voters.

Within Elisabeth Svantesson's own party, the issue is challenging. There is a general skepticism towards increasing benefits, while the party is also not enthusiastic about different VAT levels. A change in food VAT would mean it must be abolished entirely or reduced from the current twelve to six percent, which would be a multi-billion kronor investment.

Besides being expensive to implement, critics also mention that it is an uncertain reform. It could be offset by potential price increases in stores. At the same time, a reduction in food VAT is also seen as a possible inflation dampener, as high food prices have been a driving factor.

According to sources, the proposal currently on the negotiation table has been heavily revised and differs significantly from the Sweden Democrats' original. This has led several parties to consider saying yes.

Direct Effect

However, increased child benefits are also problematic within the Tidö parties, as it is seen as contrary to the ambition to cap benefits to encourage people to work more.

Those advocating for increased child benefits argue that it is a measure that would have a direct impact on the wallets of families with children who are severely economically pressured by the recession. The fact that the benefit goes to all parents, regardless of income, can be justified by the fact that these groups have also been negatively affected by high inflation.

Another point raised by several is that increased child benefits would also be a strong weapon in the battle for voters. The opposition is hitting hard against the government, emphasizing that it has not done enough for families struggling in the economic crisis.

The budget will be presented in its entirety on September 22, and a few weeks later, the opposition parties will present their counter-motions.