The Swedish Tax Reform of 1991

Tax Policy in Globalization – the Swedish Experience

IJU Morinao Graduate School of Economics, The University of Tokyo. [email protected]

Paper presented at the Third Conference of the International Forum on the Comparative Political Economy of Globalization, 31 August-2 September 2007, Musashi University, Tokyo, JAPAN.

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Tax Policy in Globalization – the Swedish Experience Morinao Iju 1 1 Introduction In Sweden, so called “the tax reform of the century” was carried out from January 1st in 1991. In this reform, with the taxation principles such as neutrality, equity, simplicity and uniformity, rate-lowering and base-broadening of the personal income tax and the corporate tax were implemented, and the tax base of the value-added tax was broadened. As a result, the tax burden was sifted from income to consumption as a whole. In this sense, this reform included the contents that met the global tax reform trend since the 1984 report of the Ministry of Finance in the United States and the tax reform by Thatcher in Britain. Further, the characteristic of the reform was its scale and comprehensiveness. It was calculated that redistribution of the tax burden was equaled to 6 per cent of GDP. 2 Accordingly, a part of the reform was carried out in 1990 in order to restrain the influences accompanied by the change of the tax system and to limit tax planning related to the drastic rate lowering of the income taxes (Swedish Ministry of Finance 1991, 9). This paper aims to identify the historical significance of this reform implemented in the context that most advanced countries were faced with the needs to reorganize their tax systems in the middle of globalization since the 1980s by analyzing the policy making process. There are two kinds of evaluations of the reform, one of which points out ‘epoch-making’ aspect and the other ‘continual’ aspect of the Swedish tax policy. Fujioka points out that the reform was influenced apparently by neo-liberalism precedent to the center-conservative government that came into office in 1991 (Fujioka 2000, 249), and he argues that the reform had the originality such as introduction of the dual income taxation, consideration of the income redistribution and decentralization (Fujioka 1992, 2). Baba or Sørensen made affirmative evaluations on the reform, which introduced the dual income taxation with separate taxation on capital income at a flat rate and progressive taxation on earned income, admitting the limitations of comprehensive income taxation from the viewpoint of capital mobility and income redistribution (Baba 2002, 14f; Sørensen et al 1998, 25). Considered the changes after the reform, the tax reform including the raise of the marginal tax rate of the earned income tax implemented in 1995 by the Social Democratic Government that came back into office in 1994 is evaluated as a separation from the reform of 1991 from the point of view like Fujioka that stresses the similarity with the US tax reform of 1986 (Fujioka 2001, 82f; Agell, Englund and 1 2

Graduate School of Economics, The University of Tokyo. [email protected] The redistribution of the tax burden by the U.S. tax reform of 1986 equaled to 1-2% of GDP.

(Swedish Ministry of Finance 1991, 9).

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Södersten 1998, 23). On the other hand, Steinmo evaluates that the characteristic of the Swedish tax policy that had achieved the income redistribution mainly via social expenditures has not changed, though he recognizes that Sweden adjusted its tax system to the new economic and political situations such as the high mobility of capital by the economic globalization (Steinmo 2002, 1ff). However, while the analysis that stresses the epoch-making aspect of the reform lacks the examination of the historical context and economic and political factors peculiar to Sweden, the analysis that stresses the continual aspect of the reform lacks the examination of the change of the tax system by the reform. So I aim to unite these analyses by examining the tax structure, the economic situations that had regulated the structure and the debate in the policy making process. As the Swedish economy after the tax reform showed the negative real growth rates accompanied by the economic crisis, the objectives such as tax revenue or income redistribution intended by the reform were not achieved. Accordingly, the quantitative analyses by the tax reform evaluation commission (KUSK) don’t evaluate the characteristics of the reform sufficiently. Therefore I clarify the historical significance of the reform by analyzing the interactions between the actors such as the Ministry of Finance, political parties, trade unions and the confederation of employers and argue that while the reform proposals were prepared to adjust the tax system to the economic globalization under the control of the Ministry of Finance, the reform was finally carried out reflecting largely the policy intention of the Social Democratic party and LO which had thought much of income redistribution, compromising with the Liberal party. 2 Background of the Tax Reform 2-1 Swedish Tax Structure Figure.1 Tax Burden (% of GDP) 60 55 50 45 Sweden Britain U.S. Japan OECD average

40 35 30 25 20 15

Source: OECD Revenue Statistics.

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1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

1971

1969

1967

1965

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Sweden is famous for its most advanced welfare system, which has been supported by the high tax burden. As Figure 1 shows, the tax burden (as % of GDP) had reached to nearly 50 per cent since the second half of 1970s and far beyond 50 per cent particularly in the second half of 1980s. This meant one of the highest tax burdens in the OECD countries together with Denmark. Steinmo points out that the tax system that supported this high tax burden is not the egalitarian one most people expect and instead it has taxed the working class heavily and has allowed Swedish corporations and capitalists numerous ways to avoid taxes and accumulate capital, which has promoted its stability and efficiency and covered the high revenue yield (Steinmo 1993, 40f). 3 Therefore I grasp the characteristic with the actual change of the tax structure. According to Table 1 which shows the total tax revenues of the central government, the local governments and the social security fund, the share of the personal income taxes of the central and local governments amounted to about 40 T a b le .1 T a x R e v e n u e (m illio n S E K ) 1988 1989 1990 1991 c e n tra l in c o m e 1 0 1 ,6 8 6 1 0 3 ,4 4 4 9 4 ,7 2 5 4 8 ,2 4 1 g o v e rn m e n t p e rs o n a l in c o m e 6 9 ,7 3 3 7 7 ,6 1 5 7 1 ,0 4 7 2 1 ,1 9 8 in w h ic h c a p ita l in c o m e n .a . n .a . n .a . 671 c o rp o ra te in c o m e 3 1 ,9 5 3 2 5 ,8 2 9 2 3 ,6 5 1 2 7 ,0 4 3 o th e rs 0 0 0 0 s o c ia l s e c u rity c o n trib u tio n s 5 7 ,4 6 9 5 8 ,2 1 4 5 4 ,8 0 3 5 7 ,5 8 7 e m p lo y e e s 637 0 0 0 e m p lo y e rs 5 4 ,7 8 6 5 6 ,0 4 2 5 2 ,9 2 6 5 5 ,0 8 2 s e lf- e m p lo y e d 2 ,0 4 6 2 ,1 7 2 1 ,8 7 7 1 ,6 5 7 o th e rs 0 0 0 848 p a y ro ll 1 6 ,0 5 6 1 6 ,9 2 5 1 8 ,6 8 6 2 6 ,9 1 2 p ro p e rtie s 1 9 ,0 5 0 2 2 ,8 9 6 2 6 ,6 3 0 3 1 ,3 1 6 g o o d s a n d s e rv ic e s 1 4 8 ,5 1 8 1 6 4 ,6 1 5 1 8 7 ,7 6 4 2 0 4 ,2 5 5 VAT 8 1 ,7 1 1 9 3 ,2 7 9 1 1 2 ,3 9 9 1 2 7 ,1 4 4 e x c is e d u tie s 4 9 ,1 9 3 5 2 ,9 2 3 5 5 ,3 3 2 5 4 ,9 6 1 o th e rs 1 ,7 1 1 1 ,4 8 7 1 ,2 6 4 400 s u b to ta l

1992 3 5 ,0 1 9 1 4 ,0 0 0 - 6 ,5 4 9 2 1 ,0 1 9 0 5 7 ,3 3 4 0 5 5 ,8 4 9 1 ,4 8 5 0 2 1 ,5 3 0 2 6 ,3 3 6 1 8 9 ,7 2 3 1 1 4 ,5 7 8 5 5 ,4 9 6 454

1993 4 6 ,9 3 4 1 4 ,7 1 5 - 6 ,1 5 1 3 2 ,2 1 9 0 4 4 ,6 2 2 0 4 3 ,3 8 7 1 ,2 3 5 0 9 ,3 9 4 2 3 ,2 5 3 1 9 6 ,3 6 6 1 2 2 ,3 9 3 5 6 ,6 4 9 444

1994 6 8 ,1 1 4 2 3 ,7 4 9 -258 4 2 ,0 1 9 2 ,3 4 6 4 8 ,7 7 2 0 4 7 ,5 0 2 1 ,2 7 0 0 1 0 ,1 4 5 2 4 ,9 4 8 1 9 9 ,6 5 9 1 2 3 ,9 9 4 6 0 ,9 6 0 732

3 4 4 ,4 9 0

3 6 7 ,5 8 1

3 8 3 ,8 7 2

3 6 8 ,7 1 1

3 3 0 ,3 9 6

3 2 1 ,0 1 3

3 5 2 ,3 7 0

1 6 8 ,9 9 7 739

1 9 1 ,2 4 7 703

2 2 0 ,0 7 2 945

2 3 9 ,2 8 3 824

2 4 5 ,2 1 6 926

2 4 9 ,6 9 4 958

2 6 1 ,9 1 1 986

1 6 9 ,7 3 6

1 9 1 ,9 5 0

2 2 1 ,0 1 7

2 4 0 ,1 0 7

2 4 6 ,1 4 2

2 5 0 ,6 5 2

2 6 2 ,8 9 7

e m p lo y e e s e m p lo y e rs s e lf- e m p lo y e d

7 9 3 ,1 3 4 3 ,1 8 9

754 1 1 7 ,7 1 2 5 ,5 7 3

823 1 4 3 ,9 7 9 6 ,2 6 2

925 1 6 3 ,3 3 1 3 ,9 5 5

1 ,5 4 2 1 5 3 ,6 6 5 3 ,5 7 4

8 ,2 4 4 1 4 1 ,3 7 1 3 ,5 8 1

1 4 ,8 1 0 1 4 4 ,2 0 3 3 ,6 0 7

s u b to ta l

9 6 ,3 3 0

1 2 4 ,0 3 9

1 5 1 ,0 6 4

1 6 8 ,2 1 5

1 5 8 ,7 8 1

1 5 3 ,1 9 6

1 6 2 ,6 2 0

to ta l 6 1 0 ,5 5 6 6 8 3 ,5 7 0 S o u rc e : O E C D R e v e n u e S ta tis tic s D a ta b a s e a n d R S V (2 0 0 1 )

7 5 5 ,9 5 3

7 7 7 ,0 3 4

7 3 5 ,3 1 9

7 2 4 ,8 6 1

7 7 7 ,8 8 7

lo c a l in c o m e g o v e rn m e n ts g o o d s a n d s e rv ic e s s u b to ta l s o c ia l s e c u rity fu n d

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Steinmo also points out that the Swedish government has decided that it is more efficient to offer

direct subsidies instead of tax deductions and credits (Steinmo 1993, 41).

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per cent in the1980s, meanwhile the share of the corporate tax amounted to 3-4 per cent that was relatively low compared with other countries. But the most of social security contributions that amounted to about 30 per cent were paid by employers, which meant relatively high tax burden of corporations (Tanzi 1995, 105). The indirect taxes amounted to 25 per cent, 60 per cent of which was shared by the value added tax and the property taxes amounted to the same level as the corporate tax. This Swedish tax structure changed drastically after the reform. First, the tax revenue of the central government decreased since 1991 and the total tax revenue also decreased since 1992 which led to the decrease of the tax burden we can see in Figure 1. Second, the share of the personal income tax declined because of the decrease of the personal income tax of the central government. Third, the tax revenue by the indirect taxes increased, most of which was attributed to the value added tax. Fourth, the capital income tax which was separated from the earned income by the reform brought slight revenue in 1991 and then brought negative revenues because of the tax credits toward net capital deficits. Fifth, the amount of the social security contributions increased in 1991 but the share of the total revenues hasn’t changed so much, considered the trend after the reform. Last, the tax revenues of the local governments were comparatively stable, though the increasing rate declined. It was because while the rate of the local income tax that each local government has the right to decide was not changed, the tax base that is determined by the central government was broadened at the reform. Accordingly, the decrease of the tax burden and the shift of taxation from income to consumption can be pointed out as notable changes by the reform. But the former change requires considerations of the economic situation that showed the negative growth rates until 1993 after the collapse of the bubble economy. The latter change of the tax structure must have been brought by the reform that contained rate lowering of the income tax and base-broadening of the value added tax. So I pay attention to the reason why the reform needed such a tax structure change in the following section. 2-2 Background of the 1991 Reform The Swedish tax reform of 1991 had contents that met the tax reform trend among the advanced countries in the 1980s. An important background was the economic globalization (Steinmo 1993; Tanzi 1995). 4 In particular, the rise of the 4

According to the definition by IMF, the economic globalization means the circumstances in which

countries all over the world come to be more and more dependent on each other through the transactions of the different goods and services across the borders, the international capital flow and the rapid and vast spread of technology (Akimoto ed. 2001, 3). This recognition means the common understanding in the recent debate about the economic globalization and this paper is also based on this

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capital mobility has made the conditions where the tax systems that had been only domestic problems must be designed considering the international transactions and investments (Steinmo 1993, 29) and caused the trend of rate-lowering and base-broadening mainly to avoid the capital flights. 5 In this section, therefore, I firstly examine the influence of the economic globalization toward the Swedish economy in the context of the domestic macroeconomic situations after the Oil Shock and then examine the problems of the former tax system that had been institutionalized based on the economic and political demands. As to the former, in spite of the strengthening of the international competitiveness by the devaluation of the currency, the rise of the labor costs during the period of overheating economy accompanied by the financial liberalization could not be supplemented and the discontent toward the former tax system that treated the domestic investment favorably erupted. The latter, the differential taxation with high rate and narrow base, which was the characteristic of the Swedish tax system, brought about tax avoidance and harmed the vertical and horizontal equity under the personal income tax and the corporate tax and caused the distortion toward indirect taxes. 2-2-1 Economic Globalization and Domestic Macroeconomic Situations The Swedish economy had deteriorated drastically since the Oil Shock. The international competitiveness declined due to the drop of the annual productivity growth rate caused by the decrease of the private fixed capital investment (on average from 3.2% between 1961-73 to 0.6% between 1973-79), and the rise of the labor costs (on average from 8.4% between 1965-70 to 12% between 1970-75) (Miyamoto 1999, 218). The balance of current account turned into deficit in 1974 and the amount reached to 18.5 billion SEK (3.5% of GDP). Faced with the recession, the government adopted the expansionary aggregate demand policy and restrained unemployment by means of the active labor market policy, industry policy and the expansion of public sector. The coalition government since 1976 that consisted of the Conservative party, the Liberal party and the Center party strengthened both the labor market policy and the industry policy, but the rapid deterioration of external debt due to fiscal deficit accelerated inflation. As a result, the Social Democratic party came back to office in 1982. ‘The Crisis Problem Group’ organized inside the Social Democratic party before back to office, had recognized this economic crisis as a structural one based on recognition. But like some authors argue that the globalization brings about the threat toward the stability of the global market (Gray (translation) 1999, 10) or the defect of democracy (Sassen (translation) 1999, 12ff), there are many discussions about its essence. However I don’t deal with this topic in this paper because it is far beyond the subject. 5

See Kaneko (1997, ch7) about the rise of international capital mobility.

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the unbalanced rise of labor costs. After the party came back to office, the finance minister Kjell-Olof Feldt, who was also the leader of the group, implemented the devaluation of the currency by 16 per cent in 1982 in order to recover the Swedish economy improving the rate of return of the export business (Swedish Ministry of Finance 2001, 7). The dismantlement of Bretton Woods system caused by Nixon Shock in 1971 brought the international financial liberalization, and the formation of offshore market by Eurodollars and the short-run mobility of capital accompanied by the expansion of multinational corporations were facilitated. Also in Sweden, Feldt followed this trend and carried out the deregulation of financial market (Miyamoto 1999, 220). 6 The expansion of the credit market caused by issuance of government bonds in 1982 and 1983 promoted the movement toward deregulation. The regulation of interest rate was abolished in March 1985 and finally the regulation of amount of loans to commercial banks was abolished in November (Miyamoto 1999, 221). Though the devaluation in 1982 entailed an increase in both exports and profits in the sector exposed to competition, the financial liberalization let large corporations move their new profits to foreign direct investment. 7 The exports declined under the worldwide recession in 1985-86 but then private consumption became the driving force of the growth in the second half of 1980s. The boom connected with declined real rate of interest caused by the expansion of the capital market and bank credit brought the boom of real property investment and the sharp rise of stock prices and finally resulted in the collapse of the bubble economy in the early 1990s. Moreover, the price growth rate and the wage growth rate increased since unemployment rate became lower than 2 per cent in 1987, which led to the rise of labor costs and the decline of productivity (Swedish Ministry of Finance 2001, 8). The changes mentioned above can be confirmed according to Figure 2. The figure shows the change of labor cost per unit in the manufacturing industry. The left bar shows the domestic labor cost and the right bar shows the external labor cost adjusted by the exchange rate, which can be one of the indices to measure the international competitiveness. The domestic labor cost continued to rise until 1990, and particularly rose sharply in the second half of 1980s. On the other hand, the 6

The Social Democratic government intended to establish the basis for the stable growth and the high

employment mixing with both stimulation of the sector exposed to international competition by devaluation and tight financing policy. They recognized that the lack of the former would lead to increase of unemployment and the lack of the latter would lead to overheating economy or inflation (‘A crisis plan for Sweden’ 1982.10.11)(Swedish Ministry of Finance 2001,7). 7

The foreign direct investment by Swedish corporations increased rapidly from 60.5 billion SEK

(average 1980-85) to 257.6 billion SEK (average 1986-90) (Confederation of Swedish Enterprise 2001, 74).

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Figure 2 The change of labor cost per unit in themanufacturing industry (1970=100) 160 140 120 100 domestic currency common currency exchange rate

80 60 40 20 0 1970

1975

1980

1985

1990

1995

Source: Confederation of Swedish Enterprise (2001, 28).

external labor cost increased more than the domestic cost in 1975 due to the deterioration of trade terms after the Oil Shock. In 1980 the positions was inverted due to the devaluations in the second half of 1970s 8 and the external cost fell sharply in spite of the rise of the domestic cost in 1985. This was attributed to the devaluation in 1982 and contributed to the growth of the sector exposed to competition as mentioned above. But in the second half of 1980s the external cost rose in spite of the fall of the exchange rate, which means the exchange rate couldn’t compensate the rise of the domestic labor cost. It is pointed out that the domestic overheating economy joined with the decrease of exports influenced the rise of prices in the product market, the labor market and many stock markets, especially the real property market (Swedish Ministry of Finance 2001, 8). In the Swedish economy that depends largely on exports, the viewpoint of international competitiveness has been considered importantly. Though it had been strengthened by the adjustment of the exchange rate since the second half of 1970s, the rise of the labor cost that couldn’t be compensated had been appearing as an issue of economic problems. In the next section, I examine what kinds of problems brought about under the economic situations mentioned above and how the reform would overcome them. 2-2-2 Problems of the Former Tax System The characteristics of the Swedish tax system in 1980s were high tax rates and narrow tax bases. 8

The devaluations were implemented by 3 per cent in 1976 and by 6 per cent in 1977.

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Table 2 Changes of tax rates 1980 1985 1988 personal income tax highest marginal tax rate (national) 58 50 lowest marginal tax rate (national) 1 4 average local income tax rate 29.09 30.37 capital income tax rate n.a. n.a. average marginal tax rate (capital inc 56 52 corporat tax 52 52 value added tax 20.63/23.46¹ 23.46 social security contributions employees 0 0 employers 35.25 36.46 self-employed 34.00 34.41 net wealth tax 1-2.5 1.5-3.0 real property tax n.a. n.a. returns from pension funds n.a. n.a. returns from life insurance funds n.a. n.a.

1991

1992

45 35 20 5 3 0 30.56 31.16 31.15 n.a. n.a. 30 54 30 30 52 40 30 23.46 23.46/25² 25

20 0 31.04 30 30 30 25

0 37.07 34.29 1.5-3.0 0.47 n.a. n.a.

1990

0 0 0 38.97 38.77 34.83 34.19 35.49 33.85 1.5-3.0 1.5-3.0 1.5 0.47 1.2 1.2 n.a. 10 10 n.a. 25 25

(1) changed from 1980.9.8. (2) changed from 1990.7.1. Source: OECD (1999,169)

First, as to the personal income tax, the top marginal tax rate had reached to about 88 per cent with both the state and the local income taxes in 1980. While the marginal tax rates had been declining gradually through the tax reforms of 1980s, the state income tax had the progressive structure of four brackets; 5, 20, 34 and 45 per cent in 1988 (Pechman et al. 1988, 190). Moreover, as the tax threshold was extremely low (10,000SEK), the personal income tax was imposed on even low-income earners at the marginal rate of about 36 per cent and on average income earners at the marginal rate of over 50 per cent. On the other hand, the underestimation of benefits in kind can be pointed out as a problem concerning the tax base. The benefits in kind consist of company cars, housing, meals, travel, loans and so on provided by employers. These were evaluated much lower compared to the market prices, which resulted in narrowed tax base. 9 It had a negative effect on vertical equity because these benefits were spread for relatively high-income earners (Swedish Ministry of Finance 1989a, 11). The lack of neutrality in the taxation of capital income brought different problems about the personal income tax. In particular, the favorable treatment of capital gains and unlimited deduction of interest payments made the economic resources concentrate inefficiently in low tax rate areas. Regarding stocks, all of the capital gains (or losses) of stocks holding periods of which were below two years 9

For example, 22 per cent of the purchase price of a new car was subject to tax in the former system.

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were taxed (or deducted), on the other 40 per cent of the capital gains (or losses) of stocks, holding periods of which were over two years were taxed (deducted). That brought about the tax planning that put capital losses of stocks below two years and capital gains of stocks over two years together (Kristoffersson 2001, 3). Though capital gains of stocks were taxed at nominal term, those of real estate were taxed at real term. Moreover, private pensions and interests of savings encouraged by the state were exempt from taxation and the unlimited deduction of interest payments enabled high-income earners’ borrowing with little cost (Salsbäck 1991, 62). 10 These less neutral treatments of capital income caused the gap between nominal progressivity and real progressivity. Second, business taxation consisted of the corporate tax of 52 per cent and the profit sharing tax, based on inflation-adjusted income, of 20 per cent. As the two taxes were mutually deductible the overall statutory tax was approximately 57 per cent. On the other hand, corporations had a wide range of opportunities to reduce their taxable income through allocations to untaxed reserves. Therefore, the effective tax burden on economic profits had been about 20 per cent. The high statutory tax rate and the mixture of many tax deductions or allowances also brought different problems. In Sweden, in addition to the double taxation, the effective tax rate of retained profits was lower than that of distributed profits at corporate level and the effective tax rate of capital gains was lower than that of dividends at shareholder level. This heavier burden to distributed profits brought the locking-in effect of capital, which led to prevention of redistribution of high-risk capital. The former corporate tax system reflected a variety of purposes as a part of national and regional economic policy (Swedish Ministry of Finance 1989a, 18). The investment funds system was one of such systems by which the government intended to influence corporations’ investment activities. 11 But about one fifth of all Swedish corporations did in fact utilize all available deductions from the tax base under the former system. This situation generated an inefficient allocation of capital within the corporate sector (Sørensen et al. 1998, 78ff) and prevented the accuracy of the interventional policy by the government at the same time. Last, in the field of indirect taxation the value added tax had been levied on a fairly narrow tax base since its introduction in 1969. Services were, in principle, tax exempt. The reduced tax rates were applied to the services in the hotels and 10

The tax revenue by the taxation of individual capital income was negative and such income

concentrated in the top 20 per cent tax payers. This situation had a negative effect on vertical equity (Baba 2000, 6) 11

Under this system corporations and economic organizations could transfer their profits up to 50 per

cent to the investment funds and the profits were exempt from tax on condition that 75 per cent of the amounts were deposited to the interest-free special account of the Riksbank (Fujioka 1992, 146)

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restaurants and building constructions. As to consumption of energy, while excise duties were levied, energy was exempt from the value added tax. Thus, indirect taxes were inconsistent with the idea of neutrality since the many exceptions contributed to distortions of the consumption pattern. In particular, with regard to the value added tax, the existence of many tax exempt areas caused non-neutrality in the form of cumulative effects that distorted competition in several aspects. For energy, the reliance on excise duties increased the tax burden, especially for sectors exposed to international competition (Swedish Ministry of Finance 1991, 47). Under such situations, the Ministry of Finance recognized that it mattered that the taxes generated an inflation pressure pushing up the wages and that the high tax rates distorted labor incentive and facilitated tax avoidance (Steinmo 2002, 10). Therefore, the tax reform of 1991 would pursue the objectives as follows, according to the ministry’s view. 12 First, the reform placed an emphasis on neutrality rather than intervention. The adoption of the neutrality principle meant that the major purpose of the new tax regime was to provide an efficient financing of public expenditures, with minimal tax distortions for individual economic decision-making. However, in an economy like Sweden’s with a large public sector and high tax revenues, there was a limit to the reduction of tax wedges. Therefore, it was of special economic importance to minimize distortions by the unavoidable but minimal tax wedges. Second, as to equity, the reform’s main focus was on horizontal equity with a uniform taxation of different types of labor income as well as a uniform taxation of different types of capital income. Broadening the tax base with elimination of exceptions and deductions would achieve horizontal equity and enable to finance the far-reaching reductions of income tax rates at the same time without raising the rates of the value added tax or of the social security contributions. 13 In addition, a large cut of the income tax rates was prerequisite for applying a uniform taxation of all items of income, it was pointed out that uniform taxation would have a positive effect on revision of vertical inequity due to an uneven distribution of capital income. But contrary to the view of the Ministry of Finance, the Social Democratic party and LO asserted that the problem of the Swedish tax system was that high-income earners and corporations pay taxes too little (Steinmo 2002, 11). Such different views influenced the policy making process. Third, with regard to resource allocations, high tax rates and non-neutrality generated distortions. The favorable treatments of benefits in kind, saving and 12

The descriptions as follows about the objectives of the reform depend mainly on Swedish Ministry of

Finance (1991). 13

In practice, the rate of the value added tax was changed from 23.46 per cent to 25 per cent from

1990.7.1.

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investment, and the heavy burden on earned income had negative effects on labor supply incentive and net savings. Therefore, it was regarded as necessary to choose a tax structure which would result in sufficient levels of labor supply, savings and investments as well as in sufficient revenues for the financing of general and extensive welfare programs. Thus, the tax reform of 1991 intended, on one hand, to lower tax rates of corporate income and capital income in order to cope with the economic globalization, and on the other hand to establish neutrality by broadening tax base in order to cope with problems such as labor supply, savings and investments due to the former system. However, in spite of the clear vision for the tax reform, the domestic political and social demands for tax policy separated the real reform from it. So I examine the debate at the decision making process. 3 Policy Making Process 3-1 Outline of the Reform Table 3 Outline of the Reform personal income taxes

earned income

capital income corporate tax

indirect tax

value added tax

tax rate broadenig of tax base local average31% fringe benefit national 20% loans from employers etc 30% 30%

aboliton of investment funds system change of valuation of inventories and depreciation

25%

taxation on enegy and services

excise duties others

real estate tax

introduction of environment-related tax 1.5% (1.2% until 1992)

Source: Swedish Ministry of Finace (1991)

Main parts of the former tax system except the net wealth tax were changed at the tax reform, which consisted mainly of rate-lowering and base-broadening of the state earned income tax and the corporate tax, introduction of separate proportional taxation on capital income, and base-broadening of the value added tax. It was intended that the reform would keep the tax level. First, as the top marginal rate of the earned income tax including the local income tax declined from about 73 per cent to about 51 per cent, approximately 85 per cent of all tax payers came to be subject only to the local income tax of about 31 per cent. Second, the capital income was levied at a flat rate of 30 per cent separated from the earned income. Third, the broadening of tax base of capital income and consumption taxation was planed to compensate the 12

tax cut of the state income tax. Last, energy taxation was revised in the light of environmental protection. After the tax reform there have been three classes of income, employment income, capital income and business income. 14 Business income included the corporate income and the income from unincorporated businesses. The sum of employment income and unincorporated business income constitutes the individual’s earned income, which was subject to state and local income tax. The social security contributions were levied on the payroll or the income from unincorporated business. Capital income, as mentioned above, was levied at a flat rate of 30 per cent separated from earned income. And corporate income was subject to the state corporate tax at a rate of 30 per cent, whose tax base consisted of all incomes including capital gain and other capital incomes. In principle double taxation continued, which meant dividend and capital gain were levied again at a shareholder level. 3-2 Tax Reform Process In the following sections, the policy intention of the government for the reform is to be clarified through the analysis of the reform process. 15 3-2-1 the First Stage After the reform in the beginning of the 1980’s which contained some cuts in tax rates for individuals and also some limitations of the deductibility of private interest, the issue of a major tax reform was not on the political agenda (Salsbäck 1993, 200). But the debate in Sweden on the tax reform started in the middle of the 1980’s influenced by the Treasury reports in 1984 on the US tax reform and Denmark where a broad political agreement was reached in 1985 on a tax reform. The issue was put on the agenda in the Ministry of Finance at first and various organizations put forward proposals for radical reforms. In the early autumn of 1986 the government had to take a stand on proposals from a government commission concerning taxation of capital gains on shares and bonds. The Minister of Finance Feldt reached the conclusion that it was the time for the far-reaching changes. He stated at a press conference on the 15th of October 1986 that a project on a comprehensive tax reform would start immediately instead of a proposal for new rules only for capital gains 3-2-2 the Second Stage (until commission reports in June 1989) 14

Income consisted of income from farm property, income from the other real estates, income from

business, income from employment, and income from extra activity and income from capital in the former system (Fujioka 1992, 92). 15

The description about the tax reform process depends mainly on Salsbäck (1993) and Åsard and

Bennett (1992).

13

After the minister’s press conference, the political parties had internal discussions trying to define their positions. 16 In June 1987 the three tax reform commissions, the Committee for the reform of individual taxation (Utredningen om reformerad inkomstbeskattning, RINK), the Committee on business tax reform (Utrednigen om reformerad företagsbeskattning, URF) and the Committee on indirect taxation (Kommittén för indirekta skatter, KIS), were organized. 17 Such commissions often include politicians from all the major parties, representatives of the industry sector, the business community and other organizations such as the trade unions. Experts from the Ministry of Finance and also independent experts often take part in the work. However, when the commissions were organized, all interest groups were excluded from RINK and KIS to keep all the usual pressure groups at arm’s length from the work in the commissions. 18 In addition, Vice-minister Erik Åsbrink was appointed as a chairman for both RINK and URF while KIS was chaired by Kurt Malmgren, a former Director-general of the tax department in the Ministry of Finance. Thus, the works in the commissions were firmly controlled by the Ministry of Finance (Salbäck 1993, 202). The work of RINK and KIS started in the early autumn of 1987. The secretariats and experts produced a lot of memos providing analyses of the present systems and models. However, the politically troublesome questions of tax rates and financing of the cuts in rates were kept out of the discussions because the parliament election was to take place in September 1988 (Salsbäck 1993, 203). Here I refer to the parliament election in September 1988 which influenced the tax reform. In this election the tax reform was one of the most important issues (Åsard and Bennett 1992, 38). In every campaign, the Social Democratic party had picked a main adversary, usually one of the three non-socialist parties or all of them. This strategy traditionally gave the party an opportunity to determine the pattern of conflict in the campaigns. In the 1988 election, the Social democratic party chose the Liberal party as a chief adversary which had presented a very detailed proposal for tax reform promptly. 19 The then prime minister and leader of the Social Democratic party Ingvar 16

The Social Democratic party and the Liberal party published papers for discussion within the parties.

Both proposals included drastic cuts in the tax rates. At the party congresses both parties got acceptance for their programs for tax reform (Salsbäck 1993, 202). 17

Besides, the Committee on inflation-adjusted income taxation (IBU) was appointed. But I focus on

the three commissions above mentioned in the following analysis. 18

Especially RINK consisted of seven party representatives; three from the Social Democratic party,

one from each of the Communist, the Conservative, the Center and the Liberal parties (Åsard and Bennett 1992, 36). 19

The liberal party proposed that the marginal tax rate should be lowered to 50 per cent for the majority

of all wage-earners and the basic personal allowance should be reduced by more than 50 per cent to finance the rate cuts (Salsbäck 1993, 203; Åsard and Bennett 1992, 38).

14

Carlsson criticized the Liberal party that they supported positions to the right of the conservatives and their proposal of rate-lowering of the income tax would treat the rich favorably. On the contrary, Carlsson favored “fairer taxes” and announced that he would never compromise with any of the non-socialist parties, 20 without specifying what the “fairer taxes” meant or how it could be achieved. The Liberal party was subject to harsh criticism by Social Democratic candidates all across the country. Other candidates of both the Left and the Center party quickly followed suit. As a result, the strategy of the Social Democratic party was successful. The Conservative party and the Liberal party lost their seats while the Left party and the Center Party won the seats. The Social Democratic party reduced some seats but succeeded in recovering the approval rating which had been falling (Statistiska Centralbyrån 2002, 10). 21 Carlsson and leading members of the Social Democratic party never suggested that they wanted to carry out a comprehensive tax reform during the election campaign. Also in the tax reform commissions there were some views that they should not be in a hurry for a conclusion. 22 However, models for tax cuts and financing the revenue losses were worked out and discussed in secret in a close circle of advisers to the chairman Åsbrink. The proposals were similar to the Liberal party’s proposals in many aspects that were under attack from the Social Democratic party in the election campaign (Salsäck 1993, 203). In October, Feldt and Åsbrink presented the blue print for tax reform to the Prime Minister Carlsson. Carlsson declared that he was prepared to back the proposals under one condition, namely that Feldt had to secure the support of LO for the reform. Feldt succeeded in convincing the leaders of LO that the tax reform program was a good social democratic tax policy. At a press conference in the end of November Feldt and the LO leader Stig Malm described how rotten the present tax system was and insisted that it was necessary to establish a fair tax system to treat capital income and personal income uniformly and restrain tax avoidance. 23 The Social Democratic 20

Carlsson stated that “Ingen ny underbar natt (no new wonderful night)” at Dagens Nyheter on 29th

August 1988 (Åsard and Bennett 1992, 39). “The wonderful night” means the fact that the Social Democratic party cooperated in a tax policy with the non-socialist parties except the Conservative party in 1981 (Steimo 1993, 184). 21

Further, the Environment party succeeded in winning seats for the first time.

22

In fact, Åsbrink, the chairman of RINK, stated “frankly speaking, I believe that it will be easier to

analyze the tax issue after the election when the parties don’t have to parade in the mass media” at Dagens Nyheter on 23rd August 1988 (Åsard and Bennett 1992, 40). 23

It was emphasized that the present system gave opportunity for tax planning and tax evasion and

increased inequality (Salsbäck 1993, 204). Further, at this time it was suggested that the marginal tax rate of the state income tax would be lowered to 20 per cent for the bracket over 200,000SEK. Some mass media criticized that the Social Democratic party broke promises. However, Carlsson argued that

15

party was also backing the reform plan. But the support was given under one condition that the combined effect of all the changes in income tax and tax on consumption must not shift the tax burden from high income earners to low income earners. This condition proved to be critical in the following reform process (Salsbäck 1993, 204). However, the following reform process was unfolded based on the support by the Social Democratic party and LO. URF worked without much public discussion. The Federation of Swedish Industries (SAF) had in the spring of 1987 put forward a proposal for reform of corporate taxation including cuts in statutory rate and base broadening. This proposal was well in line with the ideas in the Ministry of Finance and also among the opposition parties. However, the complexity in corporate taxation in general and the difficulties in calculating the revenue effects and the tax burden on the enterprises following from drastic changes in the tax base and rates caused problems. To finalize the work, the chairman Åsbrink started informal discussions with the trade union and industry representatives and the agreement between them became the final proposal of the commission (Salsbäck 1993, 206). In June 1989 the three commissions submitted the proposals. The outline of the proposals is as follows. 24 RINK 1. To lower the rate of the state earned income tax (top marginal rate from 42 per cent to 20). 2. To broaden the tax base to benefits in kind. 3. To introduce a separate taxation of capital income at a flat rate of 30 per cent. 4. To approve of tax credit toward net deficits of capital income 5. To limit deductions of interest payments and capital losses. URF 1. To lower the rate of the corporate income tax (from 52 per cent to 30 per cent). 2. To broaden the tax base mixed with the tax equalization reserves. KIS 1. To broaden the tax base of the value added tax to service and energy. 2. To introduce the environment related taxes.

the Liberal party focused on exclusively on lower marginal tax rates, thereby favoring the rich, while the Social Democratic party wanted a reform of the whole tax system benefiting all citizens in society. This point was also emphasized by Malm (Åsard and Bennett 1992, 42f). 24

See Fujioka (1992) for the details of the proposals.

16

Thus, the direction of the tax reform of 1991 to cope with the economic globalization and overcome the problems of the former tax system came out clearly in the proposals of the commissions. According to these proposals, the former tax system was complicated with different policy objectives to provide tax revenue and create distribution effects, which led to distort the decision making of individuals and corporations and caused horizontal and vertical inequities with the increasing sophistication and proliferation of tax evasion methods. Further, increasing international dependence and the deregulation of the credit market had accentuated the problems of distortions and inequalities (Swedish Ministry of Finance 1989a, 6). Accordingly, the achievement of equality by the principle of uniformity and the rate lowering were put up as the direction of the reform. These two points were closely related. From the viewpoint of horizontal equity, a uniform taxation required a radical rate lowering especially of capital income, while a radical rate lowering required base broadening through a uniform taxation to finance the revenue loss. Besides, mixed with rate lowering and base broadening tax evasion and macro economic distortion would be improved, the adjustment to the tax rates in other countries from the viewpoint of international competitiveness would be achieved, and the neutrality of tax revenue would be maintained (Swedish Ministry of Finance 1989a, 6f). These proposals were published in the middle of June and sent for scrutiny among authorities and various organizations by the beginning of October. 3-2-3 the Last Stage (until the implementation on 1st January 1991) Although the commissions’ proposals were submitted, the demands of political parties for the tax reform differed a lot. Here I clarify the points at issue comparing the parties’ opinions with the commissions’ proposals. 25 The Conservative party 26 and the Liberal party 27 emphasized the correspondence to the economic globalization. The Conservative party regarded as questionable that Sweden’s high tax burden reduced the freedom of the citizens for 25 26

The description about the parties’ opinions depends mainly on Swedish Ministry of Finance (1989b). The Conservative party is literally the most conservative in the parliament. They are supported

mainly by the self employed, employers of large corporations and city white-collar workers (Okazawa and Okushima et al. 1994a, 77). 27

The Liberal party had historically professed social liberalism which meant social reforms without

socialism and supported the Social Democratic party especially in the area of fiscal policy after the Second World War. Since the 1960’s they cooperated with the center party and drew a line with the Conservative party. They are supported by white-collar workers and intellectuals (Okazawa and Okushima et al. 1994a, 78).

17

economic activities and caused losses of the economic welfare. They insisted that the tax reform must be carried out mixed with deregulation and privatization. They disagreed with the neutrality of tax revenue proposed by the commissions and demanded that tax burden should be reduced by more than 25 billion SEK in 1991 and then by 10 billion SEK every year. In addition, they insisted that the tax rate of the state earned income tax should be lowered to 10 per cent after 1992 and the tax threshold should be adjusted to inflation. They proposed the abolishment of the double taxation on dividend of stocks and the rate cut of the valued added tax to 19 per cent. 28 The Liberal Party insisted on tax rates lowering and separate flat taxation of capital income, which were nearly similar to the commissions’ proposals. However, they demanded that tax threshold of the earned income tax should be adjusted to inflation and tax rate on returns from pension funds should be restrained to 15 per cent from the viewpoint of international competition and disagreed with limitation on deduction of interest payments and capital losses proposed by the commissions. Further, they proposed the introduction of the value added tax in the area of energy after the introduction of environmental charges though they agreed with base broadening of the value added tax. On the other hand, the Center party insisted on a reduction of the earned income tax and strengthening of energy taxation. 29 In addition to 20 per cent they demanded an extra tax bracket of 25 per cent on earned income over 500,000 SEK. They also insisted on the application of the reduced tax rate of the valued added tax in the areas of housing sector and commodities because they worried that the base broadening to such areas would cause inflation through the change of income distribution and the rise of prices. Further, they opposed against the application of the value added tax to energy and proposed environment-related selective consumption taxes. It can be recognized that they put stress on selective taxation according to policy objectives which differed from the uniform taxation proposed by the commissions. The Green party proposed the selective taxation like the Center party but more specialized to the environmental problems. They insisted on the control of fossil fuels and the promotion of utilization of new energy resources by introduction of environment related specific consumption taxes. The Left party opposed entirely on the commissions’ proposals which meant, according to their view, a neo-liberal policy. They insisted that rate lowering and base broadening would cause an increase of tax burden of low income earners and a

28

They agreed with the base broadening of the value added tax in relation to EC’s internal market.

29

The Center party was trying to play their mostly cherished role as the advocate for the low income

earners on the non-socialist side of the political spectrum (Salsbäck 1993, 205).

18

reduction of tax burden of high income earners and proposed the strengthening of taxation on corporations and capital. To sum up, the Conservative party and the Left party opposed against the commissions’ proposals in both extremes. Regarding business taxation, the parties did not criticize the proposals so much because there were little public discussions at URF as mentioned above. There were some negative views about the value added tax especially against the base broadening to the energy sector. This was because the parties started to tackle the environment policy after the Green party won the seats in the election of 1988 (Okazawa and Okushima et al. 1994b, 162). It was the Liberal party that clearly showed a close view to the commissions’ proposals. Though they had a different view about taxation on pension from the commission, there was a good prospect for the Social Democratic party to gain the majority at the parliament with them (Salsbäck 1993, 205). Therefore, the following reform process was focused virtually on how the Social Democratic party would compromise with the Liberal party though including the discussions between the parties and interest organizations. Prime Minister Carlsson invited all the party leaders and representatives of the major interest organizations to summit meetings at Haga from 3rd October. After the second meeting, the Conservative party and SAF dropped out the negotiations. After the third meeting, there remained the Social Democratic party, the Liberal party, the Center party, LO and TCO (Åsard and Bennett 1992, 45f). During the period, the LO’s study, made in the summer of 1989, was called in question. According to the study, the reform would shift the tax burden from high income earners to low income earners though the very high income earners would be the losers because of the more efficient taxation of capital income especially capital gains based on the RINK’s prospect (Salsbäck 1993, 208). 30 To keep the support of LO, Carlsson proposed that the marginal tax rate should be increased from 20 per cent to 25 per cent. The Liberal party reacted very strongly against this and the leader of the Liberal party Bengt Westerberg called for a press conference to announce that the party would leave the discussion on the reform. However, the relationship of cooperation was maintained since Carlsson declared to Westerberg that the government would stick to the original proposal of a tax rate of 20 per cent. Therefore, the proposal of the commission concerning the earned income tax was changed as follows.

30

According to the LO’s study, the tax burden of low income earners would increase by 2,900 SEK per

year on average, while that of high income earners over 250,000 SEK would decrease by 8,300 SEK on average as a result of a reform proposed by the commissions (Steinmo 1993, 235).

19

Figure 3 Marginal Tax Rates of the Earned Income Tax （％） 60 50 40 RINK proposal 1991reform

30 20 10 0 0

50

100

150

200

250

assessed income （1000SEK） Note: The marginal tax rate of 31 per cent is levied as the local income tax, the part over which is levied as the state income tax. Source: an interview with Mr. Anders Kristoffersson (the Ministry of Finance) on 27th August 2002.

Figure 4 Standard Deduction （SEK） 20000 15000 RINK proposal 1991 reform

10000 5000 0 0

50

100

150

200

250

assessed income （1000SEK） Note: Method to calculate the amount of tax（T: amount of tax, I: assessed income, SD: standard deduction, BA: base amount, ｒ: tax rate） T = ｒ{ I － SD(I) } (ⅰ) SD(I) = 0.32BA

( I ≦ 1.86BA )

(ⅱ)

SD(I)= 0.32BA + 0.25( I － 1.86BA )

(1.86BA ≦ I ≦ 2.89BA )

(ⅲ)

SD(I) = 0.32BA + 0.25(2.89BA － 1.86BA) ( 2.89BA ≦ I ≦ 3.04BA )

(ⅳ)

SD(I) = 0.32BA+0.25(2.89BA－1.86BA)－0.1( I－3.04BA) (3.04BA ≦ I ≦ 5.61BA )

(ⅴ) SD(I) = 0.32BA

( 5.61BA ≦ I )

BA=31,200SEK（adjusted to inflation every year）

Source: an interview with Mr. Anders Kristoffersson (the Ministry of Finance) on 27th August 2002.

20

First (Figure 3), at the RINK proposal the tax threshold of the state earned income tax was 200,000 SEK, which meant that approximately 90 per cent of all the tax payers would be subject only to the local earned income tax, while at the tax reform of 1991 the tax threshold was lowered to 180,000 SEK, which meant that approximately 85 per cent of all the tax payers would be subject to the local earned income tax. This change meant that relatively high income earners (between 180,000 and 200,000 SEK) were added to tax payers of the state earned income tax. Second (Figure 4), the standard deduction was planed in the RINK proposal to be raised from 10,000 SEK in the former system to 12,000 SEK, while at the 1991 reform it returned to 10,000 SEK and a partial increase was added as seen in Figure 4. The income bracket which gained the highest amount of the deduction was called “LO Peak” which had the highest rate of participation to LO. 31 Thus, the problem of tax burden which was the most important condition for the implementation of the reform was solved by lowering the tax threshold of the state earned income tax and changing the standard deduction. In addition, child allowances and housing allowances were increased from the viewpoint of income redistribution. The final agreement was reached between the Social Democratic party, the Liberal party, LO and TCO on the 7th December passing through such political processes. In addition to the changes mentioned above, the tax rate on returns from pension funds became 15 per cent and the tax threshold of the earned income tax was adjusted to inflation based on the consumer price index reflecting the intention of the Liberal party. 4 Conclusions While the economic growth stagnated after the Oil Shock, the decrease of the productivity growth rate and the rise of the labor costs weakened the international competitiveness of the Swedish corporations. Therefore, the Social Democratic government which came back to office in 1982 attempted the strengthening of the international competitiveness by devaluating the currency drastically. On the other hand, the government carried out the deregulation of the financial market following the trend of financial liberalization caused by the economic globalization. As a result, the deregulation promoted the flow out of capital and employers and capital owners had discontent about the former Swedish tax system which consisted of high tax rates and narrow tax bases.

31

Based on interviews with Mr. Anders Kristoffersson (the Ministry of Finance) on the 27th August

2002 and Mr. Mats Morin (LO economist) on the 6th September 2002. The bracket which is increasing to the peak consists mainly of female members with part-time jobs, while the bracket which is decreasing from the peal consists mainly of members with regular jobs.

21

Moreover, the former tax system had different problems in the domestic aspects. First, the narrow tax base of the personal income tax due to underestimation of benefits in kind caused vertical equity. Second, the non-neutral taxation of capital income caused different tax planning especially under the overheating economy in the late 1980’s which favored high income earners. Third, with regard to the corporate income tax the high tax rate and the narrow tax base caused the locking-in effect combined with differential taxation between distributed profits and retained profits. Last, the narrow tax base of the value added tax and the selective taxation in the energy sector distorted consumption and competition. The tax reform plans were produced by the tax reform commissions under the control of the Ministry of Finance based on such backgrounds. The foundations of the reform were the rate lowering and the base broadening. The commissions’ proposals consisted mainly of 1. introduction of a separate flat taxation of capital income, so called dual income taxation and the rate lowering of the corporate income tax to avoid the capital flight caused by the economic globalization and to achieve neutrality for investment, 2. revision of the earned income tax to improve the distortions against individual decision making of labor supply and savings, and 3. base broadening of the value added tax to finance revenue losses and to achieve neutrality for consumption. On the other hand, the government had to meet the condition that the effect of all the changes must not shift the tax burden from high income earners to low income earners to get the supports of the Social Democratic party and LO. However, it was pointed out by the LO’s study that such a shift would occur based on the commissions’ proposals and therefore the proposals were obliged to be changed. The Social Democratic government had a choice to raise the marginal tax rate of the earned income tax higher than the RINK proposal to solve the problem of distribution of the tax burden. But the government had to compromise with the Liberal party to gain the majority at the parliament. Therefore, the problem was solved by the changes of tax threshold, standard deduction and social expenditures. Thus, the tax reform of 1991 was the one to overcome political, economical and social problems peculiar to Sweden though corresponding to the trend of worldwide tax reform. As pointed out in the earlier section the objectives such as tax revenue and income redistribution were not achieved sufficiently because of the economic crisis in the early 1990’s. However, the policy intention of the Social Democratic government at the reform was maintained by the Social Democratic government which came back to office in 1994. The raise of the earned income tax for high income earners in 1995 mentioned above was one example. Fujioka argues that such a change was contrary to the principles of the tax reform of 1991. However, the facts that at the reform process the raise of the earned income tax rate was one possible choice from the viewpoint of income redistribution for the Social Democratic government and that the 1995 reform was implemented with the cooperation of the Center party which had not required a 22

tax cut more than the Conservative party or the Liberal party, show continuity between the two reforms. In that sense, I agree with the Steinmo’s view that characteristics of the Swedish tax policy have not changed. However, such a view should be argued based on the analysis of a historical significance of the reform clarified in this paper. References Akimoto,E et al.(2001) Gurobarizeshon to Kokuminkokka no Sentaku (Globalization and Choices of Nation States) Tokyo University Press. Okazawa,N and Okushima,T et al.(1994a) Suweden no Seiji: Demokurasi no Jikkenshitsu (The Politics of Sweden: The Laboratory of Democracy) Waseda University Press. Okazawa,N and Okusima,T et al.(1994b) Suweden no Keizai: Fukushikokka no Seijikeizaigaku (The Economy of Sweden: Political Economy of the Welfare State) Waseda University Press. Kaneko,M(1997) Shijo to Seido no Seijikeizaigaku (The Political Economy of Markets and Institutions) Tokyo University Press. Baba,Y(2000) “Dual Income Tax to Kazei no Kouhei (Dual Income Tax and Equity of Taxation)” Sozeikenkyu 2000･2。 Baba,Y(2002) “Suweden no Sozeiseisaku (The Tax Policy in Sweden)” Shokenrebyu Volume 42 no 7. Fujioka,J(1992) Gendai no Zeiseikaikaku: Sekaitekitenkai to Suweden, Amerika (Contemporary tax reforms: Worldwide Development and Sweden, the United States) Horitsubunkasha. Fujioka,J(2001) Bunkengatahukushishakai: Suweden no zaisei (The Decentralized Wefare State: Swedish Public Finance) Yuhikakusensho. Shimohira,Y(1999) “Roushikankei to Roudoukumiai (Industrial Relations and Trade Unions)” Maruo,N and Shionoya,Y et al. Senshinshokoku no Shakaihosho: Suweden (The Social Securities of Advanced Countries: Sweden) Tokyo University Press. Miyamoto,T(1999) Hukushikokka toiu Senryaku: Suwedenmoderu no Seijikeizaigaku (The Strategy of Welfare State: The Political Economy of Sweden) Horitsubunkasha. Agell,J. Englund,P. and Södersten,J.[1998]Incentive and Redistribution in the Welfare State .Macmillan Press Ltd. Confederation of Swedish Enterprise[2001]Facts about the Swedish Economy. Gray, J (1998)False Dawn -The Delusions of Global Capitalism, Granta Publications. Translated by Ishizuka, M (1999) Gurobarizumu toiu Mousou Nihonkeizaishinbunsha. Kristoffersson,A (2001) The Dual Income Tax in Sweden ―a note on background, principles and experience―. Swedish Ministry of Finance. Landsorganisationen i Sverige (1997) Fördelingseffekter från Skattereformen,LO.

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Organizaition for Economic Co-operation and Development,OECD. Revenue Statistics of OECD Countries.1988－2000. ――――(1999) Economic Surveys 1998-1999 Sweden. Pechman,J.A.et al.(1988)World Tax Reform:A Progress Report.Brooking Dialogues on Public Policy. Riksskatteverket. Skattestatistisk Årsbok 1998,2001. Salsbäck,J (1991) “Suweden niokeru Saikin no Zeiseikaikaku (The Recent Tax Reform)” Sozeikenkyu 1991･1 ―――― (1993) ”The Tax Reform Process in Sweden” Tax Reform in the Nordic Countries,1973-1993 Jubilee Publication,Nordic Council for Tax Reseach. Sassen,S (1996) Losing Control?:Sovereignty in an Age of Globalization. Columbia University Press. Translated by Izoya, T (1999) Gurobarizeshon no Jidai: Kokkashuken no Yukue Heibonsha. Statistiska Centralbyrån,SCB (1996) Skatter,Inkomster och Avgfter. En översikt 1996. ―――― (2002) Party Preference Survey(PSU) November 2002, ME60SM0202. Steinmo, S (993) Taxation and Democracy:Swedish,British and American approaches to financing the modern state. New Haven:Yale University Press. ―――― (2002) ”Globalization and Taxation:Challenges to the Swedish Welfare State”, Comparative Political Studies, Volume35 no7 2002 Swedish Ministry of Finance (1989a) The New Tax Proposals, Allmänna Förlaget. ―――― (1989b) ”Reservationer och Särskilda Yttranden”,Det Nya Skatteförslaget.SOU （1989:38） ―――― (1991) The Swedish Tax Reform of 1991. ―――― (2001) An Account of Fiscal and Monetary Policy in the 1990s,Government bill 2000/01:100 annex5. Sørensen,P.B.et al (1998) Tax Policy in the Nordic Countries,Macmillan Press Ltd. Tanzi,V (1995) Taxation in a Integrating World, Brooking Institution. Åsard,E and Bennett,W.L (1992) Regulating the Marketplace of Ideas:Tax Reform and Election Rhetolic in Sweden and the United States. Uppsala North American Studies

Report,Nr8,Uppsala.

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