Forest Ownership and Taxation in a Swedish Boreal Municipality Context

Holmgren, L. 2006. Forest Ownership and Taxation in a Swedish Boreal Municipality Context. Doctor’s dissertation. ISSN 1652-6880, ISBN 91-576-7098-6 Forest ownership and changes in the forestry sector have played an important role for development in northern inland Sweden and remain vital for a sustainable development. Examining forest business activity and the Swedish tax system this thesis aims to assess differences between various kinds of forest ownership, in a typical boreal municipality and to discuss whether the contribution to the local economy can be seen as generating incentives for development. The municipality of Storuman was studied, for one year, focusing on the categories Non-Industrial Private Forest (NIPF) ownership and large-scale forest ownership. Based on agricultural propertyand income tax return data, a method was devised to assess NIPF categories in relation to the boreal municipality. It enabled quantification of sales activity, operating costs, investment and direct tax revenues generated. Further, a comparative study was conducted of shareholders versus non-shareholders in the local forest common, based on their economic activities, forestry production and felling data. To contrast NIPF with large-scale forest ownership, large-scale operating costs and investments were examined. Felling statistics were used, combined with silvicultural costs obtained from an external survey. Results showed that a large share of NIPF owners’ forestry sales revenues were reinvested in their forest properties; 71 percent of sales as operating costs and 24 percent in the form of investments. Resident owners were more active and ploughed more money back into the properties in the form of investments. They also seemed less inclined to make use of disposable income from the property. Activities were also lower among shareholders. The same low harvesting activity was found on the forest commons land. This indicates that the common, from this perspective, not has worked as a force promoting local development. NIPFand large-scale forest owners earn comparable felling revenues. However, NIPF owners ploughed more back into their properties. The inevitable conclusion is that with the present tax system and activities among ownership categories, non-shareholder resident NIPF owners are preferable for the boreal municipality. They seem to keep up an activity and still generate local tax revenues, even though small. Finally, only meagre tax revenues were created for the boreal municipality budget from forest ownership, roughly SEK 600,000 in the year 2000. The present tax system in Sweden cannot be seen as generating local incentives for development, based on forestry as an endogenous capital.