According to Abba: The Official Photo Book, published to mark 40 years since they won Eurovision with Waterloo, the band’s style was influenced in part by laws that allowed the cost of outfits to be deducted against tax – so long as the costumes were so outrageous they could not possibly be worn on the street.
It really seems like these would be more expensive by more than the tax benefits
Not at all, Sweden during the ABBA age was completely nuts. There was no cap on taxes, and as such, you could incur a more than 100% marginal tax rate.
Astrid Lindgren (the beloved childrens book writer) was amongst those affected.
https://en.m.wikipedia.org/wiki/Pomperipossa_in_Monismania
@Zip2@feddit.uk explained it: