Tax breaks introduced for children’s home tuition

Tax breaks to help Swedish parents pay for extra home tuition for their children were approved in December 2012. This clarification of the tax breaks allowed for household services was supported by Almega, an employer association with many members in the home services sector. The Swedish Confederation of Professional Employees and the Swedish Teachers’ Union, however, have opposed it, saying that a tax break for tuition will increase the educational gap between rich and poor.

Background

Tax breaks for household services were introduced in Sweden in 2007. The rules meant tax deductions could be applied to work costing up to €5,830 annually. Household services in Sweden include cleaning, ironing, gardening and child care carried out in or in connection with the home. Householders cannot claim for repairs and maintenance services under this scheme, but repairs are covered by other tax credit rules.

The provision of tuition at home for high school children had not been part of the scheme. The inclusion of child care services, however, which might include help with homework for younger children, was covered.

The government put forward a proposal (in Swedish, 125Kb PDF) in September 2012 to clarify the rules, and suggested tax breaks should also apply to home study assistance for older children. The new scheme allowing such tax deductions was accepted by the Swedish parliament in December 2012.

The aim of the tax deductions, according to the government, was to relieve the pressure on families with two working parents, and especially those with small children. It also hoped this would ensure tutors declared any earnings from home tutoring.

Reaction from teachers and social partners

The Swedish Confederation of Professional Employees (TCO) and the Swedish Teachers’ Union (Lärarförbundet) fiercely opposed the proposal in a joint statement. They argued that the tax deductions favoured richer parents who could afford to pay for their children to have a home tutor. They said this risked increasing the educational gap between wealthy and less wealthy families.

The unions argued that the policy went against the principal mission of the Swedish school system to give all students the same chance of a good education free of charge. It also went against another Swedish principle, to channel help towards those students who need it most to reach their educational goals.

Unions believed tax breaks on home tuition undermined the role of a centrally financed education system, and said the money would be better used in schools.

The quality of education was the subject of continuing debate during 2012, with teachers demanding a wage increase of €1,160 a month. Teachers argued that the rise was necessary to bring them up to the level of employees in other sectors with similar qualifications (SE1209019I).

There was support for the proposal from a number of employer organisations, including the Forum for Service Companies (Almega). In a statement (in Swedish, 33Kb PDF), Almega said any clarification of the rules for tax breaks allowed for homework services was to be welcomed.

Government agencies oppose the decision

Several government agencies expressed their own views during the legislative process The National Tax Board (Skatteverket), the Swedish National Agency for Education (Skolverket) and the Swedish National Financial Management Authority (Ekonomistyrningsverket) all had concerns.

Skolverket said in a statement (in Swedish) that it agreed with many of the arguments against the tax breaks put forward by TCO and Lärarförbundet. It said home tuition for high school students should not be regarded as childcare and should not be confused with such services. The statement also emphasised the risk of favouring wealthy parents, especially in times when the agency’s own studies indicated that equality in Swedish schools had decreased.

Skatteverket also argued in an article (in Swedish) that the legislation would not clarify the delimitation of household services, as home tuition would still be confused with expert services. Skatteverket said that the fundamental definition of household services ought to be services that could be carried out by anyone within the household, and this might well not apply to expert tuition.

Ekonomistyrningsverket reiterated this point, agreeing with Skatteverket. It added that local government was responsible for the supply of remedial teaching, and that homework services could not be compared to other services covered by tax deduction.

Commentary

The tax deduction scheme for homework services has divided social partners. Trade unions opposed it while employer organisations and companies in the service sector have supported the legislation.

The change to the rules about home tuition was suggested at a time when teachers were trying to raise their own profile and secure wage increases.

The new legislation risks complicating matters, as it opens up alternatives to public education, especially for remedial teaching, and questions the responsibility of public education for setting educational goals.

Emilia Johansson, Oxford Research