Sweden's government, Left party propose profit cap on tax-funded companies

STOCKHOLM (Reuters) - Sweden's centre-left government and the Left Party will propose capping the profits of companies that operate private schools and care homes which are funded by taxpayers, they said on Friday.

However, the proposal will have little chance of passing parliament; the minority government and the Left Party lack the necessary votes. All other opposition parties have previously vowed to vote against the proposal.

Even though the proposal looks dead in the water, it could play a role in elections due in September. Many Swedes feel taxpayer money is lining the pockets of private investors, and the issue is likely to come up during the election campaigns.

The proposal would cap operating profit at seven percentage points of a company's operating capital, plus the risk-free rate, which is the average market rate on government bonds with a remaining maturity of at least five years.

The government has previously dropped plans to cap profits made by tax-funded healthcare companies using the same method.

(Reporting by Johan Ahlander; Editing by Daniel Dickson, Larry King)