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Digitalization and the Challenges to Finance Public Welfare: The Case of Sweden - Ratio

PublicationBook chapter

Digitalization and the Challenges to Finance Public Welfare: The Case of Sweden

Abstract

The chapter analyzes how digitalization and globalization challenge states’ ability to tax income and thereby finance public welfare. As work, consumption, and value creation increasingly take place without geographical presence, the link between tax bases and national jurisdictions weakens. This applies both to multinational firms and to individuals with greater opportunities for remote work.

With a focus on Sweden, the chapter discusses how a tax system characterized by high taxes on labor, lower taxation of capital, and a decentralized welfare model may be particularly vulnerable. It highlights the need for adjustments to the tax system in order to maintain legitimacy, efficiency, and the financing of the welfare state in a digital economy.

Hansson, Å. (2026). Digitalization and the Challenges to Finance Public Welfare: The Case of Sweden. In: Hansson, Å., Wernberg, J. (eds) Taxation in the Digital Era. Palgrave Macmillan, Cham.

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From Near and Afar: How Digitalization Is Shaping the Economic Geography and Conditioning Regulation.

Joakim Wernberg

Publication year

2025

Published in

Palgrave Macmillan

Abstract

Kapitlet analyserar hur digitalisering förändrar den ekonomiska geografin och därmed utmanar traditionella reglerings- och skattesystem. Wernberg visar hur teknologisk utveckling stegvis omformar värdeskapande genom att minska transaktionskostnader, skapa globala marknader även för små företag och flytta produktion och energiåtgång till platser långt från användaren. Fem strukturella skiften lyfts fram: marknadsexpansion genom digital uppkoppling, växande betydelse av immateriella tillgångar och molntjänster, digitala plattformars nya konkurrenslogik, omstrukturering av arbete via AI och distansarbete samt ökade ömsesidiga beroenden mellan länder. Dessa processer gör värde och arbete allt mindre knutet till fysisk närvaro, vilket skapar växande spänningar i regelverk baserade på territoriell suveränitet. Wernberg avslutar med att digitaliseringens ackumulerade effekter sannolikt kräver betydande reformer, särskilt inom internationell beskattning.

Taxation in the Digital Era: Economic, Legal, and Policy Challenges

Hansson, Å., & Wernberg, J

Publication year

2025

Published in

Palgrave Macmillan

Abstract

This open access edited volume discusses the impact of digitalization on taxation, using the Swedish welfare state model as a lens through which to examine the disruptive effect of new technologies on traditional tax models. Taking a multidisciplinary approach, it integrates perspectives from economics, law, audit, and public policy to shed light on contemporary challenges in taxation.

With Sweden as a central case study, the chapters in this book address broader concerns surrounding the impact of digital transformation on how states calculate and enforce tax, as well as the role of international coordination in reforming tax policy. The book covers many important topics such as financing public welfare, international attempts to combat issues concerning multinationals and consumption taxation, legitimacy and democratic implications, as well as how digitalization impacts firms’ and tax authorities’ tax administration. The effects of AI, automation and remote work are all considered, as well as how greater labor mobility is decreasing the emphasis on a geographical nexus for taxability and creating a need for urgent tax reform. Providing a diverse set of theoretical and policy considerations, this book will be essential reading for scholars, students and policymakers working in the spheres of tax law, the welfare state and public economics.

Ratio Working Paper No. 329: IPRs and Appropriability in the Digital Era: Evidence from the Swedish Video (Computer) Games Industry

Publication year

2019

Published in

Ratio Working Paper

Abstract

This study contributes to a meso (industry)-level understanding of the changing complexity of the general appropriability conditions in the digital era on the one hand, and the role of IPRs in that (appropriability) on the other hand, through a study of an industry sector – the Swedish video (computer) games industry – where digital distribution prevails and IPRs are important (copyrights in derivative works; trademarks in game titles).Combining analyses on EPO patent data, EUIPO trademark data, firm-level interviews and survey data, this study firstly identifies a paradoxical development: on the one hand, there is a clear digital take-off of IPRs’ propensity, namely firms tend to be more active in registering trademarks and valuing their copyrights (firm size and technological platform matter though). On the other hand, the digital traits – digitally induced high levels of interactivities (between supply and demand) and the digital division of a product (in provisions) – provide strong protections (to the innovation) from a technical standpoint, which offsets the importance of IPRs. Then what are IPRs for, in a technologically tight appropriability regime? This study further identifies that the increase of the importance of IPRs is not derived from IPRs’ protection function, but from their signalling function. In the digital era, new products easily disappear in the digital crowd, and IPRs can act as an important remedy by signalling the origin and quality of products as well as new innovations. This study provides a snapshot of the digital complexity pertinent to the issue of appropriability.

Details

Author: Åsa Hansson
Publication year: 2025
Published in: Taxation in the Digital Era. Palgrave Macmillan, Cham.