The minister affair at the announcement of the Reinfeldt cabinet in Sweden is a political scandal which started on October 7, 2006 when the Cabinet of Fredrik Reinfeldt, which had been announced on October 6, immediately became affected by media allegations on past errors on the part of several cabinet ministers, in particular Maria Borelius, Cecilia Stegö Chilò and Tobias Billström. The affair centred on the use of domestic workers (nannies and maids) without paying employment (payroll) tax, employer's contribution (), unpaid TV licences and other issues. On October 14, 2006 Maria Borelius resigned after eight days in office, and on October 16, 2006 Cecilia Stegö Chilò resigned after ten days in office. Criminal charges have been filed against Borelius, Billström and Stegö Chilò. The affair has also been widely reported by the international press, with the British Financial Times dubbing it "Nannygate"."Nannygate" ger eko i omvärlden, Dagens Nyheter, October 18, 2006 Så uppmärksammas skandalen i världsmedier, Expressen, October 15, 2006
Background The affair concerns several key pieces of Swedish law, politics and society: Domestic help: A person who hires someone do work for them is required to report this to the tax authorities and pay a proportion of the wages to the tax authoritiesthe so-called "employment (payroll) tax, employer's contribution". For employees born after 1940 this tax amounted to 32.28% of the wages in 2006. The part of the economy where such services are rendered without being reported to the tax authorities has been referred to as the informal economy or underground economy. Politically the issue of tax breaks for domestic help, the housemaid debate, has been a divisive one in Swedish politics and society for several years.On the protracted discussion in this matter, see also Vi håller på att arbeta ihjäl oss!, an op-ed piece pleading for domestic tax-breaks, published at right-wing site Smedjan of the Timbro think-tank, September 23, 2004, "S måste ompröva inställningen till hushållsnära tjänster" , op-ed piece by four major union leaders also supporting measures, October 21, 2005 and Börja om – med allt! reply to the latter article by well-known Socialist editorialist Göran Greider, arguing vehemently against the proposal, October 25, 2005 The new coalition had put forward the idea of introducing such tax breaks,One in four would pay for a cleaner The Local, October 3, 2006. and went on to do so in 2007. All persons who own a television set are required to pay a TV licence (), if several people live in a household it is enough to pay a single licence. It is a crime for the owner of a television not to pay the TV licence, and punishable with a fine. Previous convictions indicate that the fine is between 1,000 and 3,000 kronor, and the conviction rate has been approximately 50%. The fee is collected by Radiotjänst i Kiruna AB, a private corporation owned by the public service corporations through a non-profit foundation.SVT-chefen beslutade om polisanmälan, Dagens Nyheter, October 19, 2006 A Member of Parliament (MP) who loses their seat after an election is entitled to parliamentary compensation () in order to facilitate the transition from office. This compensation is reduced if the MP receives compensation from another source, such as a salary or other income, the parliamentary compensation is reduced by the same amount. In essence the parliamentary compensation acts as an income guarantee during a transition period.Inkomstgaranti at the Riksdag website A Swedish MP is issued with a credit card from the Riksdag which is only to be used for expenses associated with official business, such as travel and accommodation.
Maria Borelius
Nanny On October 7, 2006, the day after the Cabinet of Fredrik Reinfeldt was announced two of the ministers, Maria Borelius and Cecilia Stegö Chilò, voluntarily admitted that they had previously employed persons to take care of their children (nannies) without paying the employment (payroll) tax, employer's contribution (). Borelius did not face any judicial inquiry following her admission, since the events occurred more than five years ago, which put it outside of the statute of limitations.
In explanation, Borelius stated that: "I'm a mother of four and I was running my own company. It never would have worked otherwise".Ministers admit nanny tax dodges , The Local, October 7, 2006 However, during interviews with the media Borelius stated that she "would never have been able to afford all the fees" if she also had paid the taxes. This was soon contradicted by Magnus Ljungkvist, member of the Swedish Social Democratic Party and press secretary for the Social Democrats in the Stockholm County administration.Bloggaren som fällde Borelius, Aftonbladet, October 14, 2006 According to Ljungkvist's research into Borelius and her husband's income-tax returns, the couple earned during the 1990s. Moreover, Borelius inherited a house worth from her father in 1996. Ljungkvist, who used public sources, published his findings on his blog,Magnus Ljungkvists blog which was then picked up by mainstream media. Prime Minister Fredrik Reinfeldt initially stated that while he did not think that Borelius explanation was a good one, he still had faith in her abilities as a minister: "She has assured me that she considers it to be wrong to use 'black' services, and that she does not intend to do so in the future. I have tolerated that as an answer", the Prime Minister said.Minister who skipped nanny's tax 'earned millions', The Local, October 10, 2006 On November 16, 2006 the prosecutor in the case decided to drop any charges against Borelius relating to the matter of untaxed nannies.Ingen brottsutredning mot finansministern, Aftonbladet, November 16, 2006
TV licence On October 11, 2006 it came to light that Borelius had not paid her TV license since her return from the United Kingdom on August 21, 2006 (as resident in the UK, she was of course exempt from TV fees in Sweden even if the couple might be watching TV while staying at the house they kept in Djursholm). On October 12, 2006 Radiotjänst i Kiruna, a private agency tasked with collecting the license fees, filed criminal charges against Borelius and two other ministers of the Reinfeldt Cabinet, Tobias Billström and Cecilia Stegö Chilò.Ministers reported to police for unpaid TV licences , The Local, October 13, 2006
Other issues On October 13, 2006 it was revealed that Borelius is also being investigated by the Swedish Financial Supervisory Authority for financial irregularities concerning the sale of shares in the company Active Biotech where Borelius is a member of the board. Under Swedish law such a transaction must be reported within five days.Pressure grows on Swedish trade minister, The Local, October 13, 2006 On the same day it was also revealed that Borelius' husband Greger Larsson owns a vacation home in the resort of Falsterbo in Southern Sweden. However the property is officially registered to "Full Moon Investments Limited", a company based in the tax haven of Jersey. On October 14, 2006 the existence of an apartment in Cannes, France, with a similar arrangement came to light. The apartment in France is registered to "Soleil Investment Limited".Lyxbostad nummer 3 , Aftonbladet, October 14, 2006
Resignation In the afternoon of October 14, 2006 Prime Minister Fredrik Reinfeldt announced that Maria Borelius had tendered her resignation.Borelius resigns, The Local, October 14, 2006 She also left her seat in the Swedish parliament at the same time.Sweden's trade minister to quit, BBC News, October 14, 2006 Swedish 'tax dodge' minister quits , CNN, October 14, 2006
Cecilia Stegö Chilò
Nanny On October 7, 2006, the day after the Cabinet of Fredrik Reinfeldt was announced Cecilia Stegö Chilò voluntarily admitted that she and her husband had previously employed persons to take care of their children without paying the appropriate taxes (Stegö Chilò's announcement coincided with that of Maria Borelius). Stegö Chilò stated: "It's just as well that I say this right away. If you want to remove me because of that, go ahead." Initially Stegö Chilò did not face any criminal or administrative consequences since the events purportedly took place more than five years ago, outside of the statute of limitations. However on October 15, 2006 Per Winborg, head of the Swedish Transport Workers' Union () decided to file a criminal complaint with the Swedish police against Stegö Chilò since it could not be certain that the statute of limitations had passed. On November 16, 2006 the prosecutor in the case decided to drop any charges against Stegö Chilò relating to the matter of untaxed nannies.
On the same day Carina Hägg, a Social Democrat and Member of the Riksdag, announced that she was planning to file a complaint against Prime Minister Fredrik Reinfeldt with the Riksdag Constitutional Committee in order to examine how the Prime Minister recruited his ministers.Kritik och anmälningar hopas, Svenska Dagbladet, October 15, 2006 This proposed measure was soon seen as an abuse, or even a misperception, of the duties of the Riksdag Constitutional Committee; the Prime Minister is free to appoint anyone he wants for his cabinet and they all entered office at the same time as he did himself, so the allegation of straying from the Constitution in not checking out people's backgrounds in minute detail is very questionable, as was soon pointed out by newspapers, noted professors of political science and others.
TV licence On October 11, 2006 it came to light that Stegö Chilò and her husband had not paid their TV licence for the last 16 years, withholding more than 16,000 kronor from the public service broadcasters. Her husband registered ownership of a television five days before her appointment as minister. As Minister for Culture Stegö Chilò's responsibilities include oversight of the Swedish public service corporations.New culture minister skipped TV licence fee , The Local, October 11, 2006 Stegö Chilò expressed an ambition to repay what she owed with interest. However, on October 12, 2006 Radiotjänst i Kiruna, the agency tasked with collecting the licence fees, announced its intentions to file criminal charges against Stegö Chilò, Tobias Billström and Maria Borelius, all ministers in the Reinfeldt Cabinet at the time. Criminal charges were filed on October 13, 2006.
Resignation On October 16, 2006 Stegö Chilò tendered her resignation to Prime Minister Reinfeldt.Second Swedish minister resigns , The Local, October 16, 2006 Lars Leijonborg, Minister for Education and Research in the Cabinet of Fredrik Reinfeldt, took over the responsibilities for Stegö Chilò's portfolio.Cecilia Stegö Chilò avgår, Svenska Dagbladet, October 16, 2006
Tobias Billström
On October 11, 2006, less than a week after he took office, it was revealed that Tobias Billström deliberately had neglected to pay his TV licence for ten years, despite owning a television. Billström stated that his neglect initially was based on his political standpoint against Public Service, but that he had come to appreciate public service and that he believed that citizens and especially legislators should follow the law. Billström also expressed his ambition to repay his debt with interest.Fler ministrar betalar inte licens , Svenska Dagbladet, October 11, 2006. "I chose not to pay, as I didn't think SVT produced good programmes. But you get wiser with the years, and of course I believe that one should follow the laws that have been passed"."I've got no explanation" – culture minister, October 11, 2006