The Rule of Law in a State of Flux The Swedish Tax Law Perspective

The background to this chapter is the immense number of regulations recently promulgated at several levels, at least for the past 30 years, which are overwhelming the area of Swedish taxation law. Sweden is globally known for its high taxes and welfare state, the latter constructed and maintained with taxes. During the latest decades, though, with Sweden joining the EU in 1995 and due to digitalization, globalization, technological development and increased cross-border mobility, there has been significant pressure on the Swedish tax system. The maintenance of the welfare system is particularly tax-dependent, while legal and societal developments, such as globalization, have led to new methods to avoid or minimize taxes. One of the greatest contemporary challenges is to secure the national tax base and to counteract far-reaching international tax planning. Additionally, economic crises, Brexit, climate threats, the pandemic and the Russian aggression war on Ukraine are putting the welfare state under pressure and have placed even more stress on the situation. In order to meet contemporary challenges, the number of regulations of various kinds has been increasing, much due to initiatives taken by the EU and the OECD. The EU “machinery” and the OECD are taking over more and more of the lawmaking in different areas, but most specifically as addressed here in the areas of taxation and financial regulation. It is not an overstatement to say that at least the area of taxation is being flooded with new rules and directives. Strong and powerful government authorities, such as the Tax Agency and the Financial Supervisory Authority, do not limit themselves to only guiding the taxpayers through soft law mechanisms on how to understand and apply the law, but also, at their own initiative, submit proposals for new legislation. In addition, by law, these agencies have the mandate to impose fees and other economic sanctions on those who violate the law. These developments can be questioned from several different perspectives. On one hand, they raise questions about how to uphold the principles of equal treatment and predictability, when the legal material appears to be almost boundless and unmanageable. Other questions in the field of legal certainty and the rule of law concern how the legitimacy of the judicial system can be maintained and proportionality in the application of the law ensured when sometimes not only one but also several sanctions can be applied for the same act of non-compliance. On the other hand, these developments pose questions of constitutional character. Powerful authorities, such as the Swedish Tax Agency, are growing and getting stronger at the expense of the legislature and courts. An interesting question, therefore, is whether this development is compatible with the principle of the separation of powers. The chapter examines whether the rule of law, from a tax law perspective, in Sweden is in a state of change.