The tax turbulence was caused by the world-famous director Ingmar Bergman and the writer Astrid Lindgren. As a result, the Social Democrats, who had been in power for 44 years, lost the elections.

Art Saves the World

Tax Administration Humiliates Ingmar Bergman

These two cases seemed important in the context that in Bergman’s case, the tax administration effectively drove a national treasure out of the country. This story coincided with a message sent to me yesterday by a large client that after a long fight with the SRS they have decided to move their business. Others say this for speculative purposes, but in the IT industry it is relatively easy for mobile young people with subcontractors and clients all over the world to do this.

Astrid Lindgren mocks the progressive PIT

In turn, Lidgren published a satirical tale about the Swedish tax system, at the same time. It is essentially about the fact that her taxes exceeded her income in the relevant year! It caused a wide public debate about the Swedish tax system and significantly influenced the results of the 1976 election. One might say that we in Latvia are far from the supposedly high tax rates of Scandinavia. But this story also leads to some other reflections, for example:

  • how much does the progressive PIT system support progress (the more you do, the higher the rate)?
  • how much do we base the tax system on values, not Excel tables?
  • we were just at the Ministry of Finance together with the Fintech Association to explain that startups do not receive loans if, due to our ThinCap restrictions, they have to pay CIT on % when the loan exceeds the 1:4 equity to debt ratio. There is no such restriction in Estonia. Like against a wall.

Ingmar Bergman

In 1976, the famous director was taken for questioning by the police for alleged tax evasion in transactions between his Swedish and Swiss companies. He used the latter to settle accounts with foreign actors. Although Bergman eventually paid a tax surcharge of SEK 150k, the suspicions of tax fraud were not justified and the government officially apologized to him. This turned out to be a painful moment not only for the director himself, but for all of Sweden, as the director eventually moved to live in Germany. However, the damage done by the tax authorities was irreparable. The director himself later commented that this caused him to fall into depression and essentially (him and the whole world) lost about 8 years of the film genius’s productive work. There is an extensive coverage of this incident in the Swedish and world media, but here it is presented in the most detailed way I could find.

Read the full story by tax expert Jānis Taukačs here.