Swedish municipalities and regions are responsible for providing a significant proportion of all public services. They have a considerable degree of autonomy and have independent powers of taxation.
There is no hierarchical relation between municipalities and regions, since all have their own self-governing local authorities with responsibility for different services. Elected representatives in municipalities or regions take decisions about the services that are closest to the citizens and they have independent powers of taxation.
The possibility of decision-making based on regional and local conditions is known as local self-government and is enshrined in the Swedish constitution. Local self-government is important in democratic terms. Citizens’ closeness to decision-making makes it easier for them to gain access to local politicians and hold them accountable for their decisions. This in turn improves their opportunities to influence service provision in their municipality or region and how their taxes are used.
Since local self-government makes it possible to design services in a range of ways, it is easier to find flexible solutions that are suitable for a particular municipality or region. This helps to improve the efficiency and effectiveness of service provision.
Procure services from private companies
Municipalities and regions may procure services from private companies. Privately managed providers financed from tax revenue must offer the service concerned to citizens on the same conditions as those that apply to a similar public service.
Independent powers of taxation
Compared with other EU member states, Swedish municipalities and regions have wide-ranging responsibilities. They largely finance themselves by means of local and county council taxes and the fees paid by the citizens for various services. Taxes are levied as a percentage of the inhabitants’ income. The municipalities and regions decide on their own tax rates. The activities are also funded to some extent by government grants. The average, overall local tax rate is 30 per cent. Approximately 20 per cent goes to the municipalities and 10 per cent to the regions.
Local government financial equalisation
Citizens in Sweden should have access to welfare on equal terms regardless of their place of residence. At the same time, conditions vary a great deal between municipalities and regions in different parts of the country, as do their economic ability to provide such services. To solve this problem, Sweden has a system of local government financial equalisation which is one of the most far reaching in Europe.