Business, Economics and Jobs

Sweden tries to curb buy-and-throw-away culture through tax breaks

Swedish repair.jpg

Under Sweden's new tax laws, taxes on repairs for apparel will be 50 percent lower starting Jan. 1, 2017. 

Credit:

Leonhard Foeger/Reuters

If you wear your jeans a lot, eventually they’ll start to get a hole. What do you do? You throw them away and buy a new pair, of course. Everybody knows that.

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Sweden’s Minister of Financial Markets and Consumer Affairs Per Bolund says we need to change that mindset.  

“Part of that is making it more affordable and economically rational to stop the buying and throwing away, instead repairing your goods and using them for a longer time,” says Bolund.

He’s trying to push people in that direction through tax breaks; he's spearheading a 50-percent tax cut for Swedes to repair items like clothes, shoes and bicycles. The new rule takes effect on Jan. 1, 2017, with a goal of decreasing waste in the world’s landfills, which are filling up at an alarming rate.

This idea — not just discarding stuff — it’s not exactly revolutionary.

“Clothing used to be repaired,” says Robert Ross, a sociologist and expert in the apparel industry at Clark University in Worcester, Massachusetts. He says not long ago there were tailors and cobblers in every neighborhood throughout the US, “and if you had a tear in a sock, somebody in your family darned the toe and the heel.”   

That sounds quaint today. But let’s say you’re Swedish and a zipper breaks on your jeans, and it costs $20 to repair that. On top of that, you’d also pay a 25-percent value added tax (VAT), or $5 more. After Jan. 1, that tax on repairs would be cut in half, and you’d save $2.50.

Ross thinks this tax cut is a well-intentioned idea, but “I don’t think that’s going to make the difference between somebody getting a pair of pants let out or a heel on a shoe.”

OK, fair enough. But the new Swedish law also applies to bigger-ticket household appliances: things like refrigerators and washing machines. If Swedes repair those items, they can take a 50-percent tax deduction off the cost of the labor. In high-tax Sweden, that can amount to substantial savings.

But again, it’s all about the bottom line. Consider my ancient lawn mower. Every time I yank the string to start 'er up, once, twice, three times … I just don’t know if the lawn is getting cut that day.  

Mike Daly, who teaches yard tool repair classes in Indiana, says hourly rates to fix a lawn mower there are about $70 to $80 an hour.

“So you could be looking at $150 to $170 to repair that lawn mower,” says Daly. “It wouldn’t be worth it if it’s 10 years old and you paid $100 to begin with, unless maybe it had some sentimental value.”

It doesn’t.

But let me throw some numbers at you. Let’s say I have a $500 Craftsman deluxe mower. Now, I hire the Swedish version of Mike Daly at $80 an hour. With the tax break, he’ll really only be costing me half that much. If I’m a Swede, I’m probably thinking twice about getting a new mower. That’s largely the point of the new Swedish rule.

Sociologist Robert Ross  — remember, he thinks the tax break is too insignificant to bother fixing a pair of jeans  — does think the new law can get Swedes thinking differently, moving in the right direction, about what they buy: more durable items worth keeping and repairing.

“Fewer better, is better than more, cheaper,” says Ross.

Better for the environment, and perhaps better for jobs too. Sweden’s consumer affairs minister Per Bolund says the new law will put more Swedes to work repairing stuff.  

But isn’t the point of a modern, healthy economy to constantly produce — to buy and sell stuff? Bolund says there are other ways to grow, and it’s not helping Sweden’s economy when somebody in Stockholm buys a new TV.

“Most of the electronic goods that we use are imported,” says Bolund. “Repairing your goods is quite labor intense as compared to production. So we believe if consumption behavior is altered, this can lead to a boost in the employment and the labor market.”

Bolund adds that the tax cut for repairs is but one part of a larger strategy to promote sustainable consumption. He says the government’s role is to move the needle — so taking care of the planet becomes not just a moral decision, but an economically rational one too.