Timo Harakka, the Social Democrats’ member in the Parliament’s Tax Sub-Committee, says the opposition party is eager to raise taxes on property and lower those on earned income.
Timo Harakka, the Social Democrats’ member in the Parliament’s Tax Sub-Committee, says the opposition party is eager to raise taxes on property and lower those on earned income.


The Social Democratic Party, the largest opposition party in the Finnish Parliament, is expected to unveil its tax programme on Wednesday.

Timo Harakka (SDP), a member of the Parliament’s Tax Sub-Committee, reveals to Uusi Suomi that the programme will include proposals such as raising taxes on property and lowering taxes on earned income.

“A small step towards higher property taxes and another towards lower labour taxation would take us closer to the EU average,” he explains.

Antti Rinne, the chairperson of the Social Democrats, has previously stated that the party is a proponent of introducing a five per cent withholding tax on dividends from foreign pension and investment funds. The withholding tax, he added, would be a way to fund the 100-euro net increase to pensions not exceeding 1,400 euros he promised in his speech on May Day.

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The Social Democratic Party also proposed in its shadow budget that the tax liability of foreign-registered companies be made expanded in Finland.

Harakka confirms that the withholding tax is part of the programme.

Although the withholding tax is targeted particularly at foreign-registered companies, the tax would inevitably also affect companies, organisations and trade unions domiciled in Finland. Harakka points out, however, that the proposal has not come under any criticism from domestic pension funds.

He also estimates that introducing the withholding tax would increase tax revenues by 250–500 million euros.

Harakka says the underlying idea of the tax programme is to establish a tight and broad tax base while reducing tax rates with a view to plugging several loopholes, such as that created by the different tax treatment of various investment products.

“Lobbyists have successfully gained tax benefits for certain products. The taxation should be neutral between different products. For example, the deductions associated with capital redemption policies should be removed,” he tells.

Helsingin Sanomat on Monday revealed that the opposition party is also set to propose that a negative income tax be adopted in an attempt to encourage low-income social security recipients to find employment.

Harmonising the various value-added tax rates is another objective for the Social Democrats, according to the official mouthpiece of the opposition party, Demokraatti. Harakka confirms that the party is preparing that excise and environmental taxes be consolidated into a single tax and that the tax rate be determined based on the principles of sustainable development.

He concedes that introducing a value-added tax on various products and services based on their climate impacts would be hardly straightforward but adds that the primary objective currently is to promote discussion on the issue.

“It’s something that’s worth taking forward and, if it was adopted globally, it’d represent a key shift in our thinking,” he says.

Aleksi Teivainen – HT
Photo: Roni Rekomaa – Lehtikuva
Source: Uusi Suomi

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