Many Finns will have to re-think their consumption habits due to an upcoming reform of tax processing practices in Finland, says Hannu Nummiaro, an economist at Lähi-Tapiola.
Nummiaro estimates that budgeting for the winter holiday season – the busiest shopping season of the year – will become more difficult for some consumers as of next year, because tax refunds will be disbursed to most individual taxpayers in August instead of December.
Finns spend up to 25 per cent more than the monthly average during the winter holiday season, with many funding their annual shopping splurge partly with tax refunds.
“It is no wonder that many have adjusted their tax rates to make sure the amount of disposable income peaks in December – simultaneously to expenses. You will have to be more careful in the future to make sure your money lasts until Christmas,” tells Nummiaro.
“Some consumers have probably looked at the state as a bank, as the interest rate on tax refunds has been 0.5 per cent rather than the 0 per cent on savings accounts. That is okay if the tax refunds have been used to welcome Christmas, basically by balancing the imbalance between the annual rhythm of income and expenses.”
Helsingin Sanomat on Sunday reported that a total of 2.9 billion euros in tax refunds will be disbursed to almost 3.6 million Finns on Tuesday, 11 December.
Nordea, in turn, revealed last week that 15–65-year-old people plan on spending an average of 580 euros, including 340 euros on gifts, at Christmas. The amount budgeted for the holiday represents an increase of 100 euros from the previous year.
“One year ago, I was wondering why the strong economic growth and record-high consumer confidence is not reflected in Christmas budgets. Now they certainly do! The previous time estimates of Christmas budgets were this big was 2012,” commented Olli Kärkkäinen, an economist at Nordea.
Almost a third of respondents also indicated that they will spend least at least some of their tax refunds on holiday expenses.
Aleksi Teivainen – HT
Source: Uusi Suomi