The boldest promise made so far during the campaign for Sweden's Sept. 16 national election came not from a politician, but from the dynamic and outspoken young president of Sweden's domestic airline.
Jan Carlzon offered to put up the 7.2 billion Swedish crowns (nearly $2 billion) that the government could lose if whoever wins the election immediately cuts Sweden's top income tax rate to 50 percent. At present, everyone from skilled workers to executives like Carlzon now pays an average of 65 percent -- and some as much as 90 percent -- on that portion of their income above a certain level.
His offer is not really as generous as it sounds, Carlzon said yesterday. He believes that by slashing the tax rate so drastically, the government would soon take in as much or more money from the many Swedes who now evade the high taxes or simply refuse to work longer hours or take on more responsibility because they lose to the government more than half of any extra money they make.
Carlzon, 38, bases his tax plan on what he accomplished by dramatically cutting air fares at Linje Flyg, which is jointly owned by Scandinavian Airlines and the Swedish government.
When Carlzon was made president of Linje Flyg last June after successfully running Scandinavian Airlines' lucrative tour and hotel operations, the domestic airline had been losing money for three years while charging typically high European fares on its network of routes connecting Swedish cities and towns.
In November, against the advice of colleagues and even U.S. airline and travel executives he consulted, Carlzon cut by 50 percent the fares on half of Linje Flyg's flights -- the least popular and least profitable flights, many of them to the most remote parts of the country.
"See Sweden for half price," said ads and bumper stickers.
On paper, the fare cuts could have cost the airline a quarter of its already insufficient income.
But the airline has already increased its business by 150 percent. Families, pensioners and lower-income workers who could not afford to fly before are now jetting all over Sweden, which is about the same size and shape as California.
As a result, Linje Flyg, which lost more than $7 million last year, will make a small profit this year, according to Carlzon.
"Instead of a few customers paying a lot," he said, "we now have a lot of customers paying less each."
His technique has been copied by Sweden's state-owned railway system, which this summer reduced all one-way train fares by 30 percent and offered a 40 percent further discount for travel on any day except Friday and Sunday, when Swedes travel to and from the countryside for the weekend. First reports show that the trains' passenger volume is increasing beyond all expectations.
A dramatic tax cut, he argued, could also sell Swedes on working more to make more money and stop the fast-growing tax avoidance "black economy."
"I believe most people in this country are prepared to pay 50 percent of anything extra they earn to the state to cover the cost of our social welfare system," he explained, "as long as they can keep the other 50 percent.
"But as soon as the government takes more than 50 percent, people take other steps. They choose to work less and have more free time because extra work won't pay enough. They refuse promotions."
Some Swedes also avoid paying higher taxes by doing business as much as possible within the "black economy." Those who can barter with each other instead of using money -- a builder may put up a summer home for a lawyer in exchange for free legal work. And craftsmen charge customers less if they are paid in cash that cannot be traced by the tax man.
Carlzon said many Swedes are ready to return to their traditional scrupulous honesty if the government would provide the incentive. But he is disappointed about the initial reaction to his proposal.
The Conservative Party does favor his plan. But while all the others are at least vaguely committed to cutting the upper-level tax rate, they propose to do it slowly -- in gradual steps -- to avoid the risk of a sudden large loss of revenue.
"Step-by-step would not have the same effect as doing it overnight," Carlzon argued. "It would not make enough of a difference to the people. They wouldn't change what they are doing. The government must take a risk if anything is to happen."
That is why he offered to raise the risk money from business associates and banks as a guarantee against a big government loss. Although the offer was an obvious publicity ploy to attract attention to his tax plan, he said he can raise the money from businessmen who approve his idea if the new government calls his bluff.