Simpler domestic services subsidy could boost gender equality
Published: 13 November 2008
Tax deduction on domestic services was introduced in July 2007, allowing for tax to be deducted for services like cleaning, gardening, childminding and cooking. The purpose of the measure was to reduce housework for families facing significant time pressures, as well as to create new jobs and reduce illegal employment in domestic services. Under the new tax deduction measure, private citizens only have to pay half of the cost of domestic services, up to €5,300 a year.
The number of people who applied for tax deduction on domestic services, a measure introduced in July 2007, was lower than expected. As a result, the government wants to simplify and expand the possibility to deduct tax for domestic services. Meanwhile, the Swedish Confederation of Professional Employees is proposing that working parents with small children should receive such services at subsidised prices, claiming that this will increase gender equality in society.
Background
Tax deduction on domestic services was introduced in July 2007, allowing for tax to be deducted for services like cleaning, gardening, childminding and cooking. The purpose of the measure was to reduce housework for families facing significant time pressures, as well as to create new jobs and reduce illegal employment in domestic services. Under the new tax deduction measure, private citizens only have to pay half of the cost of domestic services, up to €5,300 a year.
The Swedish government estimated that the tax deduction measure would cost the state about €73.7 million for the first six months. However, this estimate appeared to be too high, amounting instead to only around €13.7 million. As a result, in order to increase the consumption of domestic services, the government wants to simplify the system. In June 2008, the Swedish government published an official report (in Swedish) on tax relief for domestic services. The report examines ways in which the system could be made more efficient and easier to use.
Trade union proposal
One of the bodies consulted for the report, the Swedish Confederation of Professional Employees (Tjänstemännens Centralorganisation, TCO), put forward its own proposal for domestic services in an article which appeared in the newspaper Dagens Nyheter. The confederation proposes that working parents with small children should be able to hire domestic services at subsidised prices – reduced by as much as 90%. With this subsidy, the cost of services would amount to about €16 for between two and three hours of domestic services. TCO believes that this measure would help to increase gender equality in Swedish society.
Time spent on paid work and housework
The table below gives an overview of how much time women and men spend on paid work and housework. The results show that women bear the most responsibility for housework, especially in families with small children. For example, women in a couple with children aged younger than seven years spend an average of two hours and 36 minutes in paid work each day, compared with six hours and six minutes doing housework. TCO argues that this reality limits women’s opportunities in the workplace (SE0807029I). The confederation believes that its proposal to offer subsidised services would mainly help women to reduce their responsibility for housework, in turn increasing women’s opportunities and level of equality in the labour market.
| Women aged 20-44 with no children | Women with children younger than 7 years | Men aged 20-44 with no children | Men with children younger than 7 years | |
|---|---|---|---|---|
| Paid work | 4.25 | 2.36 | 6.04 | 5.28 |
| Housework | 2.42 | 6.06 | 1.59 | 3.50 |
Source: Statistics Sweden (Statistiska Centralbyrån, SCB), Tid för vardagsliv, 2003
Reactions of social partners
In an interview broadcast on Swedish Radio (Sveriges Radio, SR), the Chair of the Swedish Confederation of Trade Unions (Landsorganisationen i Sverige, LO), Wanja Lundby-Wedin, claimed that tax deduction on domestic services would not increase gender equality. Ms Lundby-Wedin argued that a more effective proposal would be to make it easier for parents to reduce their working time and to work for wages not dependent on an employee’s sex (SE0707019I).
The Minister for Integration and Gender Equality, Nyamko Sabuni, believes that the TCO proposal is good in principle and would make it easier for families with small children to combine work with family life. However, Ms Sabuni argues that such targeted reforms are not always effective in practice and that the proposed system would be too difficult and expensive to control. According to the TCO proposal, only families in which both parents are working would be entitled to the subsidised prices; thus, to prevent abuse of the system, a monitoring system would need to be put in place to ensure that both parents were actually working. Ms Sabuni believes that a system whereby the buyer is reimbursed directly, rather than having to wait for the money to be refunded through the tax system, would benefit families with small children as well as everyone else.
The Minister for Enterprise and Energy, Maud Olofsson, stated in an interview published in Dagens Nyheter that the TCO proposal would make the system more difficult. The minister believes that it would be more effective to simplify the existing system and to reduce taxes for low and middle wage earners. Lower taxes would, in turn, enable more people to purchase domestic services. Indeed, the government is already planning to cut taxes in 2009, as announced in its recent Budget Bill (SE0810039I).
Thomas Brunk, Oxford Research
Eurofound recommends citing this publication in the following way.
Eurofound (2008), Simpler domestic services subsidy could boost gender equality, article.
