Debate: Use common sense when drawing the line in the sharing economy

What exactly is the sharing economy? It is described both as a pleasant utopia with new services and new jobs, but also as a dystopia with black jobs and global monopolies. We need to distinguish between private sharing and professional business activities, writes Lars Ilshammar at Digital Utmaning.

Digitalization is transforming our economy and paving the way for what is known as the sharing economy, which can bring us new services, more choice, lower prices, save resources and create new jobs. But the sharing economy can also lead to unfair competition, poorer working conditions, an eroded tax base and sharing platforms with global monopolies. Although the sharing economy is often discussed, it is unclear what it is and the term is used to describe both pleasant utopias and alarming dystopias.

This summer, the European Commission set out the guidelines for a European agenda for the sharing economy, calling on member states to regulate properly and not create unnecessary barriers to the sharing economy. The Commission wants member states to clarify what applies in five areas:

1. market access. Many activities require a permit or license. In this respect, it is important to leave a wide margin for private individuals to act, so that they are not simply classified as traders requiring a permit. Member States should also make sure that the permits required are genuinely fit for purpose and do not act as barriers to entry.

2. liability. A professional provider has a high level of responsibility for the products or services delivered, but should private individuals be required to take the same responsibility, the sharing economy comes to a halt.

3. user protection. A Swedish inquiry is currently working on the question of how the sharing economy should relate to consumer protection legislation. Private individuals may find it difficult to take the same responsibility as companies, but we cannot give free rein to obviously harmful goods and services either.

4. Employment. The sharing economy makes self-employment easier, but what does it mean for labor law, occupational health and safety, taxes and fees, and when can a service provider be considered an employee of the sharing platform?

Self-employment can mean freedom, but also a risk that many will in practice become day laborers who underbid each other, just as they did a hundred years ago outside the gates of the Freeport. For over a hundred years, the state and the social partners have regulated labor market conditions so that the economy develops, and they must continue to do so.

5. Taxes. Today, there are tax-free thresholds on income that individuals do not have to declare, which the European Commission considers a good model. But the question is whether digitization can make tax collection even easier, with digital sharing platforms sharing taxable income with tax authorities as seamlessly as they mediate payment between supplier and user. The digital economy should be easier to coordinate with laws and regulations than the old analog one was, not least because it mostly excludes cash handling.

The big question is how to distinguish private sharing from professional business activities. In order to facilitate the sharing economy, the government could investigate in many different areas whether it is possible to have a "light variant" of regulation for very small companies and a normal regulatory burden for larger ones. For example, the terms of reference for the Taxi Inquiry state that the inquiry should look into whether a new taxi category can be created for pre-booked and pre-paid taxis where, for example, the taximeter can be replaced by digital tools.

The sharing economy is exciting and only at the beginning of its development. This is why the Digital Challenge think tank is launching a consultation to try to define what the sharing economy is, or whether it is perhaps the case that the sharing economy is made up of several different phenomena that should not be easily lumped together into one concept. We need to have a better understanding to facilitate new business models while curbing aberrations.

Lars Ilshammar, Chairman of the think tank Digital Utmaning