Taxation and Left-wing Redistribution: The Politics of Consumption Tax in Britain and Sweden

Abstract

Recent research claims that the link between partisanship and policy is weak and that left-wing governments tax the poor surprisingly heavily. In this article, I argue that left-wing taxation depends on the institutional context, not constraints from unions or overall spending. Using novel data, I demonstrate that the left tax more regressively in countries using proportional electoral systems, and more progressively in majoritarian countries. The political mechanism is evaluated in a comparison of Swedish and British tax policy after WWII. Uncertainty over future influence made the left in Britain wary of consumption tax, while the left in Sweden combined consumption tax with expanded social programs. Political risk shaped the strategies of key actors and helps explain the divergence in tax policy during this period.