Abba was popular at a time that Sweden was experimenting with socialism (it failed).
In an interview, the gentlemen were asked (by this time the couples had split and the ladies were removing themselves from interviews and the like) why their outfits were so outrageous.
Ulvaeus explained that the decision to wear these outfits was to appease Swedish tax authorities who, at the time, had special tax discounts for items of clothing bought for work purposes that couldn’t be worn for everyday life. The loophole almost certainly wasn’t created to make tax exemptions for pop bands’ stage clothes but, technically, ABBA was right as nobody was wearing that outfit down the shops.
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