TAXATION IN SUPPORT OF EQUALITY: THE SWEDISH RUT DEDUCTION AND THE CIRCULAR ECONOMY.

• Author: Trenta, Cristina

1. INTRODUCTION 350 II. DEVELOPMENT AS AN INTERDISCIPLINARY AREA OF STUDIES 353 III. SUSTAINABLE DEVELOPMENT, EU LAW, AND INTERNATIONAL LAW 356 IV. SUSTAINABLE DEVELOPMENT AND THE CIRCULAR ECONOMY 360 V. SWEDEN AND THE NORDIC COUNTRIES 362 VI. RUT TAX DEDUCTION 363 A. Repair, Reuse, Recycle 365 B. Effects on Gender Equality 367 C. The Relationship Between Gender Equality and the CE 370 VII. CONCLUSIONS 372 I. INTRODUCTION

   This Article investigates the taxation and legal profiles of sustainable development (1) and the circular economy (CE) in its European and international law dimensions (2) through a review of the ongoing evolution in the Nordic countries (3) and, specifically, in Sweden.

   The CE is an approach to production and consumption that aims at increasing the value of the resources being used and, at the same time, at lowering their number. (4) The UN Agenda 2030 and the Sustainable Development Goals (SDGs) enshrine the current global consensus on the pressing needs to safeguard the planet and ensure the future prosperity of mankind. (5) The CE is an intrinsic part of the picture painted by the SDGs and offers a way to move towards more sustainable and resilient societies. (6) It has emerged as an alternative model of production and consumption based on repair and reuse and has the potential of creating positive environmental outcomes. (7)

   In the wake of increasing social pressure to transition the global economy to more sustainable and less planet-damaging ways to produce goods and services, the concept of CE has recently risen to the attention of lawmakers and policymakers. (8) CE is "an approach to combat environmental challenges and promote sustainable development" as part of "the discussions on industrial development." (9) It is also not a new concept; it was first introduced by British environmental economists Pearce and Turner in a seminal 1990 book. (10)

   The move towards a more sustainable global economy postulates approaching environmental problems systemically, addressing them as parts of an integrated whole extending to fiscal and social issues (11) that include unemployment, poverty, and the growth of inequality. (12) This need for an integrated approach seems to be also acknowledged by the EU Commission. In its 2001 Communication, "A Sustainable Europe for a Better World," (13) the Commission maintains that sustainable development is not only threatened by environmental issues related to transport congestion, climate change, aging, loss of biodiversity, or global warming but also by socio-economic phenomena, because "[p]overty and social exclusion have enormous direct effects on individuals such as ill health, suicide, and persistent unemployment." (14)

   This was further reinforced with the release of the 2015 Communication detailing the EU action plan for the CE. (15) In the document, the CE is defined as an economy "where the value of products, materials and resources is maintained in the economy for as long as possible, and the generation of waste minimised" (16) and one that will have an increasing role in shaping society, as it is bound to play a role in every discussion that concerns "jobs and growth, the investment agenda, climate and energy, the social agenda and industrial innovation, and...global efforts on sustainable development." (17) The document states that "[t]he transition to a circular economy is a systemic change" and that a relevant part of the problem is "to create the conditions under which a circular economy can flourish": "new technologies, processes, services and business models which will shape the future of our economy and society" are needed to "transform waste into high value-added products." (18)

   In March 2020, the European Commission released the new CE Action Plan, "For a Cleaner and More Competitive Europe," (19) which outlined the necessity for the Union to move towards more sustainable CE processes. The document restated the EU's willingness to use its influence, expertise, and financial resources to implement the 2030 Agenda for Sustainable Development (20) (2030 Agenda) and to accelerate a transition that remains slow in the making. (21) It was followed by the European Green Deal report, describing the road map for a sustainable economy in the EU and stating that taxation plays a vital role in the process since "[w]ell-designed tax reforms can boost economic growth...and help contribute to a fairer society." (22) Finally, in the Staff Working Document, "Leading the Way to a Global CE," the Commission addressed its support to this transition to the CE as a fundamental and decisive change in direction in support of a more sustainable model of economic development. (23)

2. DEVELOPMENT AS AN INTERDISCIPLINARY AREA OF STUDIES

   According to the UN's own "Resolution on the Right of Development," development is an interdisciplinary area of study and intervention and represents "a comprehensive economic, social, cultural and political pro-cess." (24) Legal doctrine acknowledges that sustainable development demands not only new laws but also substantial amendments to existing ones, since old regulations are ill fit to new problems. Translating the complexity and intricacies of sustainable development into specific legal principles that can be unequivocally and successfully implemented is part of the problem. (25)

   To better understand this problem space, this Article adopts an interdisciplinary approach in which legal concepts, principles, and findings are anchored, complemented, and supported by conceptualizations and observations from ancillary non-legal disciplines. More specifically, this Article adopts Lamb's interdisciplinary method for tax-ation (26) to identify, analyze, and elaborate social data from a tax law perspective and evaluate the existing legal framework in detail without renouncing the possibility of a lex ferenda perspective of what the law should be or how it should regulate a particular situation. Such an approach is particularly useful when research questions in the legal domain are strictly intertwined with a necessary understanding of societal issues and factors. (27)

   While the integrated or integrative approaches typical of interdisciplinary methodology (28) are considered necessary to address problems of sustainable development from the perspectives of economics or environmental management, albeit with "little consensus over how to do integration, even what integration means, or when and why it should be pursued," (29) current law studies tend to focus more narrowly on the legislative angle alone or on approaching the subject from the specialistic point of view of sustainability law or environmental sustainability law. (30) Given how "[international and national policy and law state the 'policy integration principle,'" implying that "environmental, social, and economic considerations must be integrated in decision making pro-cesses" (31) to substantially reduce both energy use and environmental harm and that already "[a] variety of legal tools are available to promote these changes," (32) a more holistic approach can prove to be effective for critical reflections within the legal sciences and, in the case of this Article, for the specific area of tax law.

   It is because of this systemic outlook that this Article investigates and tracks the early steps taken by CE efforts in the Nordic countries in their interactions with sustainable development: not only do these countries share common traits and fundamental values, (33) making them a rather homogeneous sample that can be easily compared, but they also have each in their own way started "'virtuous circle[s]' between equality, efficiency and social solidarity" that initiate at the state level, with policy and legislation. (34) Even though these countries express their own national laws and regulations, sometimes doctrine refers to these collectively as "Nordic law" in order to better highlight the peculiarities and similarities that enshrine what has been called "the Nordic legal mind." (35)

3. SUSTAINABLE DEVELOPMENT, EU LAW, AND INTERNATIONAL LAW

   Already in 1987, the Brundtland Commission, originally established by the UN in 1983 as the World Commission on Environment and Development, defined "sustainable development" as the human ability "to make development sustainable--to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs." (36)

   The foundational principles of intra-generational equity, (37) equity between people belonging to the same demographics, and inter-generational equity, (38) equity between different demographic cohorts, emerge clearly from this early definition: the necessity to both ensure a better quality of life for everyone and to ensure that this quality of life is there for future generations. (39) If equitable duties and rights persist across time, the implication is that the fulfilment of inter-generational obligations demands the scrutiny of intra-generational equity. (40)

   In 2006, recalling that very same definition, the Council of the European Union emphasized that sustainable development is an overarching objective of the European Union set out in the Treaty governing all of the Union's policies and activities (41) and that any activity directly supporting sustainable development efforts within the EU or part of the Union's international outreach should respect the principles of democracy, gender equality, solidarity, the rule of law, and the fundamental rights as set out in the EU Charter of Fundamental Rights, (42) including freedom and equal opportunities for all.

   Furthermore, sustainable development finds explicit acknowledgement in EU Treaties along three different dimensions of development, which have to be addressed together systemically: economic, social, and environmental. A life of dignity for all, a peaceful society, and social inclusion are in the view of the EU at the...