| 1. |
- Jansson, Jenny, 1979-
(author)
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Creating Tax-Compliant Citizens in Sweden : The role of Social Democracy
- 2018
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In: The Leap of Faith. - Oxford : Oxford University Press. - 9780198796817 ; , s. 56-78
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Book chapter (peer-reviewed)abstract
- As discussed by Nistotskaya and D'Arcy in Chapter 2 on Sweden, a long tradition of generally high-quality institutions has paved the way for excellent state capacity. This chapter focuses on the twentieth century, a time when Sweden developed into a high-tax-rate country with extraordinary tax compliance—a unique combination. Sweden underwent a profound transformation in the middle of the twentieth century: The Social Democratic Party (Socialdemokratiska arbetarpartiet, or SAP) won the 1932 election and stayed in office for forty-four consecutive years. High union density and corporatism introduced in the postwar period gave extensive powers to the union movement and to employers' organizations. The “golden age” of social democracy—the 1950s and 1960s—was characterized by full employment, an expanding welfare state system that included benefits such as comprehensive all-inclusive social insurance schemes, and diminishing wage inequality. It was in this context that Sweden transformed from a country with low tax rates to a country with high tax rates. Swedes are today among the most heavily taxed people in the world. Interestingly, Sweden also has the highest level of tax compliance, an unexpected combination. How was such a transition possible? This chapter focuses on the sense-making of the tax system. More specifically, I examine how the SAP tried to create and reproduce tax morale while upholding the state's capacity to collect taxes. In democracies, governments need the electorate's support for their policies, regardless of the capacity of the state; of course, how citizens perceive politics is also important for winning elections. The political elite can play a crucial role by making sense of policies.
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| 2. |
- Nistotskaya, Marina, et al.
(author)
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Getting to Sweden: The Origins of High Tax Compliance in the Swedish Tax State
- 2018
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In: Steinmo S. (ed.). The Leap of Faith: The Fiscal Foundations of Successful Government in Europe and America. - Oxford : Oxford University Press. - 9780198796817 ; , s. 33-55
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Book chapter (peer-reviewed)abstract
- Sweden is one of the strongest, most stable and high-compliance tax states in the world. As Steinmo (1993, 41) notes, “the hallmarks of the Swedish tax system have been its broad base, its stability, and its high revenue yield.” Tax revenue as a percentage of GDP was at least 25 percent above the OECD average from 1965 to 2013, putting Sweden in the top five tax-yield countries for nearly the entire period (OECD 2014). Since the 1980s collection losses (taxes levied but not paid) have been less than 1 percent of total tax receipts, standing at the level of between 0.3 and 0.5 percent for most of the period (STA 2013, 20). By comparison, in the UK a similar measure, known as the tax gap, was between 6 to 8 percent of total tax receipts in the period 2005–2013 (HM Revenue & Customs 2014, 4; authors’ calculations). Experimental data in the companion volume Willing to Pay? show that the Swedes are the most compliant taxpayers in the sample of five countries. Why is this the case? How did Sweden become one of the most successful states in terms of tax yield and compliance levels? While most of the classic works on the Swedish tax state have emphasized the constitutional structure of the state that emerged in the twentieth century (Steinmo 1993) and social democratic politics in the twentieth century (Jansson in this volume), we look at earlier periods, tracing the roots of Swedish exceptionalism as far back as the sixteenth century. We draw on the rich existing literature and add to it in a number of ways to make five key arguments as to how Sweden became Sweden and why it is such an exceptional case. First, we argue that the Swedish state adopted advanced methods for monitoring the availability, quality and use of the main economic assets for tax collection purposes at a very early stage, leading to both the creation of institutional capacity and the development much earlier than in most other European states of a direct vertical fiscal contract between the king, the embodiment of the state in the early modern period, and his subjects. Second, we show how the development of both the capacity to raise taxes and the fiscal contract were assisted by the use of the newly reformed Church of Sweden, which both collected population information for the state and legitimized its actions. Third, we argue that the fiscal contract was particularly strong because the extensive, accurate data available to the state allowed for fairness in the distribution of the tax and conscription burdens, and the military successes of the Swedish state in the early period of state-building delivered benefits to the population: peace within its borders, freedom from foreign rule, and law and order. Furthermore, the military allotment system – an organizational innovation, stimulated by war, for extracting tax in kind from a peasant economy – created conditions that could foster a horizontal contract between subjects. Fourth, we emphasize that these developments were aided by Sweden’s relatively unique social structure. Having a large free peasantry and a small weak nobility led the state into a direct fiscal contract with the broad bulk of the peasantry rather than, as happened elsewhere, through the land- and capital-owning nobility. Fifth, we show how the structure of the Swedish economy, particularly the late onset of industrialization, forced the state to find innovative administrative technologies, producing a tax structure and administration that could easily adapt to the collection of modern taxes. Taken together, these factors explain how Sweden, over the course of four hundred years, cultivated its fiscal capacity and strengthened the fiscal contract between ordinary taxpayers and the state. Its contemporary exceptionalism was set in motion centuries ago.
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