“In 1950, Swedish tax revenues were around 21 per cent of GDP. In the next thirty years, taxes increased by almost one per cent of GDP annually (Ekonomifakta, n. d.). How was this huge increase in taxation possible?
One explanation is that many Swedes supported the policies of the leading Social Democratic party, which held power in government over much of the twentieth century. Another possible explanation is that the rise in taxation was effectively hidden from the public.
As the Italian economist Amilcare Puviani predicted in 1903 (cited in Baker, 1983), and Nobel laureate James Buchanan discussed further, it is easier for politicians to raise hidden, indirect taxes rather than visible taxes (Buchanan, 1960). Changes in Swedish taxation strongly support this hypothesis. In Figure 5, it is shown that the entire rise in taxes since 1965 can be attributed to the introduction and gradual increase of an indirect sales tax (VAT) and the slow but steady rise of the indirect employer’s payroll contributions.
Without this rise in hidden taxation, taxes in Sweden would have remained at around 30 per cent of GDP.
http://www.iea.org.uk/sites/default/files/in-the-media/files/Sweden%20Paper%20August%202012.pdf"Interesting" notion of hidden taxes. Surely they impact on prices and cannot be really hidden? And if the tax to GDP ratio stood at 30 per cent - would the rise in expenditure to GDP not have taken place? - doubtful as the pressure for increased expenditure was there. Surely an instance of a balance tax policy with the taxes spread between different tax handles to fund the demand for public expenditure by the population.
