ECN 414 GROUP 4 ASSIGNMENT

GROUP MEMBERS

AVOSEH HONEY 19AF025171

OMOJUGHARE BLOSSOM 19AF025233

ADEOLA DADA KEHINDE 19AF025156

ESINAULO CHIDERA 19AF025181

NJOKU CHIDUBEM 19AF025204

OLALEYE MOBOLAJI 19AF025229

OGUNWOMOJU OLUWATOMI 19AF025216

PHILLIP IRIA ANITA 19AF025246

UKWUIJE VINCENT 19AF025253

OTUNAIYA ENIOLA 19AF025240

SWEDEN ECONOMIC SYSTEMS
OVERVIEW OF THE SWEDISH ECONOMY
Timber, hydropower, and iron ore all contribute to Sweden's highly developed export-driven
economy. These make up the foundational resources of an economy focused on international
trade. Automobiles, telephones, pharmaceuticals, industrial machinery, fine equipment,
chemical products, home goods and appliances, forestry, iron, and steel are some of the major
businesses. Historically, Sweden's economy was based on a modern agricultural sector that
employed more than half the population. As proven by firms like Ericsson, ASEA/ABB, SKF, Alfa
Laval, AGA, and Dyno Nobel, Sweden is currently developing engineering, mine, steel, and pulp
sectors that are competitive internationally.

Privately owned and market-focused businesses make up the great majority of Swedish
businesses. Additionally, the welfare state is robust, with public spending making up as much as
three fifths of GDP. In 2014, the government possessed 24% of the total national wealth.

Sweden was one of the World War II neutral powers, therefore unlike many other European
nations, it did not have to reconstruct its banking system, economy, or nation as a whole.
Under a hybrid system of high-tech capitalism and generous welfare benefits, Sweden has
managed to maintain a high quality of living. Sweden has the second-highest overall tax take as
a percentage of national income, just behind Denmark. The entire tax take as of 2012 was
44.2% of GDP, down from 48.3% in 2006.

The National Institute of Economic Research forecast GDP growth of 1.8%, 3.1%, and 3.4% for
the years 2014 through 2016 in 2014. The Baltic states, Poland, and Slovakia are the only
nations that are anticipated to maintain comparable or higher growth rates, according to a
study of the predicted economic growth rates of European Union member states.

ECONOMIC HISTORY OF SWEDEN

Sweden began to become an industrialized, urbanized nation in the 19th century after
beginning as a predominantly agricultural economy. Because of the persistent poverty, a sizable
section of the population left the country, mostly for the United States. In the latter half of the
19th century, economic reforms, the development of a modern economic system, banks, and
businesses were implemented. As the "powerhouse" of the Scandinavian region at the time,
Sweden had a robust industrialization process that started in the 1860s. Furthermore, during
the Age of Liberty (1719–1722), the Swedish Riksdag had already become a very active
Parliament. This tradition persisted into the nineteenth century, laying the groundwork for the
shift to modern democracy at the end of the century.

These local democratic traditions were another asset that enabled the Scandinavian countries,
including Sweden, to "catch up," in addition to relatively high levels of human capital formation,
which were the result of the Reformation and related government policies. This economic rise
was likely the most notable event in that region during the nineteenth century. Life magazine
declared in 1938 that Sweden had the "best quality of living in the world" by the 1930s.

After the First World War, Sweden significantly benefited from the new circumstances, such as
the increasing need for raw materials and foodstuffs and the removal of international rivalry for
its exports, by declaring itself neutral during both world wars, averting much physical
destruction.Sweden had a postwar boom, which was essentially a continuation of the strong
inflationary trends that existed throughout the war itself[35]. The devastating recession that hit
Sweden in the early 1990s marked the pinnacle of a downward trend in living standards that
began in the 1970s and affected many other industrialized nations more negatively than
Sweden. The economy has performed well since the mid-1990s. Sweden ranked 14th in terms
of purchasing power parity and had the tenth-highest nominal GDP per capita in the world in
2009.

LABOUR MARKET POLICIES OF SWEDEN

The "activation principle" is a long-standing political tradition that guides Sweden's labor
market strategy. Although it has been in place since 1940, this policy does not serve the same
objectives for unemployed people as it does in other nations. The welfare state in Sweden is
both universal and substantial, with a number of right-based programs. In order to sustain a
rich welfare system, these policies aim to increase full employment, achieve high economic
growth, low inflation, and general development of the labour market and the improvement of
the work force.

However, Swedish labor market policies have never been founded on rights; instead, there are
a lot of conditions and personal obligations, particularly for the unemployed. The Swedish
welfare system includes a crucial component known as "arbetslinjen," or the "work-line,"
sometimes known as the "employment strategy" in English. Instead of focusing solely on
passive income, it places an emphasis on labor activities in terms of skill improvement and
retraining. According to the conventional social democratic philosophy, the work-line also
emphasizes a strong work ethic, in which one should be self-sufficient through a regular
occupation. The Swedish welfare system is profoundly rooted in these fundamental traits, and
the new center-right administration that was elected at the end of 2006 did not challenge it.

The bulk of the labour market legislation in force in Sweden today dates back to the early
1970's, when, for example, statutes on workers' participation in decision-making in working life,
job security and the status of trade union representatives at the work place were adopted.

According to the Working Hours Act, normal working hours are limited to a maximum of 40
hours per week. This Act also contain provisions concerning inter alia overtime, night work,
Sunday work and time off. Collective agreements stipulate weekly working hours ranging from
35 to 40 hours. The EC Directive on working-time was implemented in Sweden from 23
November 1996 but resulted only in minor amendments to Swedish legislation.

Under the Annual Leave Act, all employees are entitled to a minimum of 25 working days, that
is five weeks, of annual vacation. The Security of Employment Act protects employees against
unfair dismissal. An employer can only dismiss an employee if he can demonstrate objective
grounds for the dismissal. An objective ground for dismissal exists, for example, if there is lack
of work so that one or more persons are redundant. However, if it is reasonable to transfer the
employee to a different position in the same company, he should not be dismissed. Moreover,
dismissals must generally respect the principle of "last in, first out".

Sweden has a relatively developed system of employee participation in the workplace, based on
the appointment of trade union representatives who exercise rights on behalf of the
employees. Trade union representatives are given specific rights to enable them to carry out
their activities; they enjoy, for example, special protection against dismissal.

Employers must inform employees about the development of the company's activities,
profitability and its personnel policies. Where an employer envisages major changes in the
company's activities or to the employment conditions for one or more members of the trade
union, he is obliged to consult the employees before taking any decision.

In private enterprises with at least 25 employees, employees have a right of representation on

the Board. It has not yet been decided how to implement the Directive on European Works
Councils, but some Swedish multinational enterprises such as Scansped, Electrolux, SKF, Volvo,
and Ericsson have already concluded voluntary agreements.

WELFARE SYSTEMS OF SWEDEN

The welfare system of the swedes consists of different organizations and systems that tend to
welfare of its citizens. It mostly drives on taxes and is executed by the public sector on all levels
of government as well as private organizations. It can be further sub-divided into three parts
falling under three different ministries. Social welfare is a derogatory responsibility of the
ministry of health and social affairs.

The Swedish practice a cradle-to-grave social welfare system. Over the years it has transcended
to a cradle-to-grave system which is now a threat to the citizens of Sweden and their well-
being. It first began under the social democrats who had control of the political stance in
Sweden for six decades and it has quickened under the center-right government that took over
in September 1991.
Firstly, to understand Sweden’s cradle to grave system, we must understand what a social
democrat is. They share with liberals the notion that they have a commitment to cultural and
religious tolerance and they believe in the possibility and virtue of collective action of a public
good. In regards to this, and in other to improve the welfare of its citizens, Sweden continues to
symbolize the social-democratic state. Hence they created a cradle-to-grave social security
system that is heavily tax-subsidized and with high and universal social expenditures. It is also
combined with considerable fiscal interventions in labour markets and strong labour unions.
Cradle-to-grave welfare system provides essential services for all its citizens at every stage. It
requires a lot of money to operate and thus it’s financed from revenue collection through taxes
and social fees.

From the 1930’s through the 1960’s Sweden developed a new social welfare state which is
sometimes called the mixed economy, consisting both elements of private ownership and
government control. Manufacturing of basic goods were still left in the hands of the private
individuals but a taxation policy was imposed to achieve a level of equalization in income
distribution. Currently, an average of 64% of Sweden’s gross national product goes to the public
sector to finance the system. Taxes from swede’s salary range from about to 50% to 60% and
an additional 22.5% in VAT.

Sequentially, private entrepreneurs plight become harder. This is because compulsory

contribution towards employee benefits from employer’s is another form of payroll tax. This
averages 40 per cent on top of the salary which, of course, means that the “government bite”
of the total wage is even higher than the 50 to 60 per cent indicated. Entrepreneurs who work
on a tight profit margin, cannot afford this additional burden and have to decide from range of
choices from going out of business, downsizing employees or going back to a sole proprietor.

The Swedish welfare system faces deep altercations as of today. Economically speaking, the
country is basically feeding upon itself which can seriously cause damages as time goes on. The
German Marxist Jürgen Habermas defined the dilemma in these words: “The division of labor
between the state and the private sector that forms the basis for the Swedish model, requires
that a continually increasing share of the national product be transferred to the public sector.
Technical and economic changes must be accompanied by enormous public investments in order
to insure the stability of the society. There is a point where a dislocation in the social structure
caused by the free play of the market forces, becomes so great that the people are no longer
willing to pay the price of the necessary remedies. The demand for security remains, but the
desire of each person to contribute to the cost of this security diminishes. The welfare society
then faces a crisis of confidence.”

An achievement of the Swedish welfare system is found in the living standards and life
expectancy of its people who often end up on top international rankings. The level of
unemployment they sought to attain when adopting a social democratic state was ultimately
achieved and unemployment rate is still decreasing thus improving welfare for all swede’s.

ABUSE OF THE SYSTEM AS DISCOVERED BY SCHOLARS

Seden has frequently been cited as the best modern example of how a severe industrial class
society may be turned into a sophisticated human welfare society. How this human welfare
society has been able to shield kids from maltreatment and neglect has been a point of
discussion. A current assessment of the system, which was started by the national government
in December 2007 and made public as a proposal for a new Child Protection statute in June
2009, outlines the systemic changes and trends in social practice over the past fifteen years as
well as the potential it holds. The current Swedish child protection system, as well as other
issues, are explored from a macro-sociological perspective in the final part.

Welfare overuse is the intentional (and unintentional) misuse of welfare benefits by individuals.
As such, perceptions of widespread free-riding and abuse constitute potential threats to the
legitimacy and public support that encompassing and tax-funded welfare states rely on
(Rothstein 1998; 2011).

The issue of fraud and the abuse of the social welfare system has become increasingly topical in
most industrial countries with greater difficulty in funding public sector expenditure. With large
budget deficits, low economic growth, and high unemployment, tolerance for different forms of
abuse generally decreases. This trend also applies in Sweden. Sandberg, B. (1998).

Critics of Swedish society have asked whether Sweden’s modernity has been achieved at the
expense of some of her own values. Others question the Swedish value of the structure itself and
its ability to maintain equilibrium in the absence of certain other discarded values. Sensational
elements in the western press have criticized Sweden as a nation of sex, sin, suicide, and
socialism.

Serious critics have pointed out problems like alcoholism, juvenile delinquency, the deterioration
of the family and increasing rate of crime, sexual promiscuity, venereal diseases and addiction

To its most severe foreign critic, Sweden is a nation of “new totalitarianism”, whose modernity
cannot obscure symptoms of social stress.

Beliefs in the equality of sexes, sexual liberation and women’s liberation are said to have
contributed to social stress

The UN Convention on the Rights of the Child prohibits all forms of violence against children.
Sweden was early in introducing a ban on disciplinary violence; however, difficulties have been
noted in identifying children in need of protection and providing help for children exposed to
violence. Schiff (1972)

"Sweden: Fraud and Abuse of Welfare Systems", Journal of Financial Crime, Vol. 5 No. 4, pp.
396-405. https://doi.org/10.1108/eb025855

AN OVERVIEW OF THE SWEDISH TAXATION SYSTEM

Taxes and tax rates are set by members of the Swedish parliament and local councils. Tax
payments are handled by the Tax Agency, which operates nationwide. Taxes are collected by
the Tax Agency and then identified to the state, county governments, and municipalities. Taxes
are used to fund all public services, including education, health care, defence, and public
administration. Many of the taxes collected are returned to taxpayers in the form of pensions
and other benefits.

The Swedish Tax Administration, a centralised organisation, was founded by merging ten local
authorities on January 1, 2004. As of September 2014, the Tax Agency has seven regions. The
Swedish Tax Agency employs approximately 10,492 workers, of which 66.0 percent are women
and 34.0 percent men. The Government (Ministry of Finance) can not interfere with individual
tax matters. An independent agency, the Swedish Tax Agency is answerable to the Government
but does not answer to the Government (Ministry of Finance).

The Tax Agency believes that “everyone wants to play their part” in society, and it's known that
the majority of people are willing to pay their taxes as long as everyone or nearly everyone
does so. If taxpayers are convinced that cheating is not worth the effort, they will continue to
pay their taxes. The Tax Agency provides guidance and checks on its website and brochures. To
ensure that the data it collects is accurate from the start, the Agency provides assistance. To aid
people in fulfilling their duties, the Agency offers information in brochures and on its website.
Checking is used to deter people from cheating. If people and companies see that checks are
effective, more people are willing to pay their taxes. Checking also enables corrections of
problems with the information submitted. E plained below are some of the components of the
tax system and how they are handled by the tax administrators in sweden.

LIABILITY TO TAXATION

All corporations registered in Sweden are taxed on their worldwide income. A corporation is
considered to be resident if it is registered in Sweden or if its management and control are
there. Capital gains on Swedish real estate and business operations conducted there are subject
to national income tax for non-resident corporations. Tax treaties may alter tax policy. In
general, a non-resident corporation will be considered to operate in Sweden if it has a
permanent establishment there.

TAX RATES FOR LEGAL ENTITIES

A reduction in corporation tax from 26.3 to 22.0 percent was instituted from 2013 onwards for
limited companies, foundations, economic associations, non-profit associations, and life
assurance companies. During the period 2010-2013, the corporation tax was reduced from 28
to 22 percent for the enterprises specified. A self-employed individual who operates a business
pays municipal income tax, national income tax, and social security on the net profit from the
job.

TAX ALLOCATION RESERVES AND GROUP CONTRIBUTIONS

A corporation's taxable income is calculated by adding up its annual income statement profits
and subtracting normal business expenses from gross income. The amount of taxable income is
computed by subtracting normal business expenses from gross income. Companies can make
deductions from gross income to determine taxable income if they maintain and operate their
business. The tax base can be decreased by 25 percent (30 percent for trading companies and
sole proprietorships) to the tax allocation reserve (periodiseringsfond) each year. It must be
refunded after six years and its amount then added to the base of the next year. The provision
is therefore 21 percent in the initial six years and varies in magnitude according to the amount
that is returned versus the amount that is charged in the year. It is possible to shift profits
openly between affiliated resident companies (koncernbidrag) under certain conditions in
Swedish tax law. A net operation loss is carried forward to the following year and is
accumulated or diminished depending on the following year’s result. There is no time limit for
losses carried forward.

INDIVIDUALS INCOME TAX

The computation of taxable income is broken down into three categories: earnings, business,
and capital earnings. The net incomes from each business source are added up to provide total
taxable business income. Taxable capital earnings are determined after deduction of interest
payments and capital losses. Employees and business workers are aggregated to get the
taxpayer's earned income for national and municipal income tax purposes. Capital earnings are
measured after deducting interest payments and deductible capital losses. All categories of
employment earnings and capital incomes, respectively, are one source of revenue. The losses
incurred in those categories may be offset against earnings from the same category in the
current year (but with some limitations). In addition, any surplus must be carried over
indefinitely.Capital gains may, subject to restrictions, be used to offset either the national or
municipal income tax or the national real estate tax, provided that the category is negative. Any
amounts that are not offset during the current year cannot be carried over to subsequent years.

TAX ON INCOME OF EMPLOYMENT

Income from employment is the sum of all earnings deriving from a person’s very own work
which includes:• Cash payments: wages, ailment advantage and pension• Fringe benefits:
agency vehicle and meals vouchersThe tax on earnings from employment is comprised of
municipal tax (council tax) and state tax. The majority of human beings solely pay municipal tax.
The quantity varies relying on the municipality of house (29.19-34.70 percentage tax rate,
2015). The common blended price of nearby earnings tax in 2015 was once 31.99 percent.
Incomes decrease than SEK 18,800 are exempted from any taxation 12 months 2015For tax yr
2015 there are two thresholds where the men and women are obliged to pay the state earnings
tax. The decrease threshold is 443 900 SEK. On revenue above this limit, the individuals have to
pay a 20 percentage nation profits tax. The top threshold is 629 200 SEK whereby the man or
woman has to pay an extra 5 percentage kingdom profits tax.In addition, everybody can pay a
widely wide-spread pension contribution (7 percent). Deductions are solely allowed for charges
that are immediately related with the work. Deductions are by no means allowed for private
dwelling expenses. The most frequent deductions are these for tour to and from work.

REAL ESTATE TAX

Government property taxes on homes were eliminated on January 1, 2008, and were replaced
by a municipal property charge. 2008 brought about a new fee for single-family homes of SEK
6,000, not to exceed 0.75 percent of the assessed value of the property. The highest fee for an
apartment in an apartment complex is SEK 1 210, however it cannot exceed 0.3 percent of the
assessed value for tax purposes. By being tied to changes in the revenue base amount, the fees
are index-linked.

The Budget for the Fall of 2007 proposed raising the capital tax on the gain from selling a
property from 20% to 22% in order to coincide with the elimination of the property tax.

Additionally, it is recommended that a 0.5 percent yearly interest charge be added to

theamount that was postponed. The taxable amount for capital gains on the sale of commercial
or rental properties was fixed at 90% of the actual gain. The idea was supposed to go into effect
in the 2008 fiscal year.

VALUE ADDED TAX

Unless specifically exempted by law, all deliveries of products, performances of services, and
imports of goods and services from outside the European Community are subject to VAT
(mervärdesskatt or Moms). The usual VAT rate in 2015 is 25 percent (of the tax base). The lower
rate of 12 percent is applicable to lodging, dining, and camping. Newspapers, books, magazines,
sporting events, and passenger transportation are all subject to a 6% tax. The VAT gathered on
sales, which must be paid to the government, can be credited against the tax paid on
purchases.

Most businesses keep monthly records of the VAT they have paid, the amount, and the how
much they paid in special taxes report (skattedeklaration) (skattedeklaration). Report on taxes
is due on the 12th day of the second month. after the conclusion of the pertinent month. If the
tax exceeds the turnover of SEK 40 million By the 26th of the month, the report must be
submitted. after the conclusion of the pertinent month. For tiny businesses with annual
revenues under The VAT must be declared in the SEK one million A special tax report is issued
annually. For business with annual revenue between SEK 1,000,000 and The taxpayer may elect
to report 40 million quarterly or monthly.
LESSONS OF NIGERIA AND AFRICA

The swedish economy has undergone a series of structural and economic transformations over
the years which has brought the economy to the level which it is at today. Some of the lessons
that can be learned from the swedish economy are:

 ADOPTING A SUITABLE WELFARE SYSTEM:

As seen above, the swedish economy has been able to adopt a welfare system that suits
the economic an sha brought them to where they are today. As of 2022, sweden ranked
14th out of 87 countries according to the quality life index. This goes to show the
effectiveness of the welfare system in the country. On the same ranking system, Nigeria
ranks 87th according to the quality life index out of the 87 countries. The state of the
Nigerian welfare system shows In the state of wellbeing in the economy. The Nigerian
government and Africans in total need to learn from the swedish example of adopting a
welfare system most suitable to the economic system they run.

 LABOUR MARKET RESTRUCTURING:

The labour market structure of the swedish economy, as managed by the organisations
and policies of the swedish labour market, sets an example for Africa when it comes to
labour market growth and development. The labour market policies in Sweden are
structured to cater for the best needs of the labour force of the country and optimize
productivity in the country. The Nigerian labour market suffers from poor management
as a result of inefficient implementation of policies and the implementation of poor
policies by government. This is the reason Nigeria suffers from so much labour force
issues such as, ASUU strike, high rate of unemployment and underemployment, etc. The
Nigerian government should be able to restructure the labour market system to curb
certain issues faced in the economy.

 IMPROVEMENT OF THE TAX SYSTEM:

The state of the Nigerian tax system is reflected in the amount of revenue generated
from tax annually. The swedish tax system allows for an optimum level of efficiency in
collection of tax in the economy. The Nigerian tax system has not witnessed this level of
efficiency in ta x collection as a result of the high incidence of evasion.