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Minister of Finance Petteri Orpo (left), Prime Minister Juha Sipilä and Minister of European Affairs Sampo Terho commented on the outlines of the government’s budget for 2018 in a news conference in Helsinki on 31 August, 2017.
Minister of Finance Petteri Orpo (left), Prime Minister Juha Sipilä and Minister of European Affairs Sampo Terho commented on the outlines of the government’s budget for 2018 in a news conference in Helsinki on 31 August, 2017.

 

The Finnish government made surprisingly short work of its budget negotiations.

Prime Minister Juha Sipilä (Centre) revealed yesterday afternoon that the government ironed out the final details of its budget proposal for next year roughly a day ahead of schedule, at roughly 4pm on Wednesday.

The leaders of the three ruling parliamentary groups, however, decided to continue their discussions on additional reforms and the security implications of the recent knife attack in Turku, South-west Finland.

“I have to say this was by far our best [budget session],” Sipilä stated in a press conference on Thursday.

He highlighted that the government is not only closer to reaching the objectives of reversing the debt trajectory and raising the employment rate to 72 per cent, but also set to deliver on its promise not to raise the overall tax burden.

“We made the promise of not raising the […] overall tax burden in order to support growth and [ensure] the predictability of taxation. We’ll use measures other than tax hikes to reduce the sustainability deficit and balance public finances,” said Sipilä.

He also admitted that the government must nevertheless step up its effort to raise the employment rate to 72 per cent.

“This is an absolutely crucial objective from the perspective of our long-term sustainability and from the perspective of ensuring all Finns get to be part of this growth. The latest figures show that we’ve gotten closer to this objective,” he reiterated.

The updated projections also indicate that the country should reverse its debt trajectory in 2021, added Sipilä.

“We’ll be able to reach that objective if the positive development that we’ve seen in the employment situation over the past year or so continued on its current trajectory. And that goes hand-in-hand with growth. We should in the longer term be able to permanently achieve growth that’s faster than the eurozone average.”

The budget for next year is worth a total of 55.7 billion euros and shows a deficit of 2.96 billion euros, thus bringing the public debt burden to roughly 110 billion euros – equivalent to 47 per cent of the gross domestic product – by the end of 2018.

The government highlighted in its press release that it agreed to introduce income tax concessions worth a total of 270 million euros across all income groups and continue levying the so-called solidarity tax on individuals with annual earnings of at least 72,300 euros.

The tax concessions will be funded by, for example, raising the alcohol tax to generate additional revenues of 100 million euros.

Aleksi Teivainen – HT
Photo: Mikko Stig – Lehtikuva

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