The shadow budgets unveiled over the past couple of weeks by opposition parties fail to acceptably answer the most pressing question in Finland: how to sustain the current economic and employment growth, views Petteri Orpo (NCP), the Minister of Finance.
“The biggest mistake would be to put an end to the economic and employment growth by making notable tax cuts,” he stated in the Finnish Parliament on Wednesday.
The Social Democratic Party proposes in its newly unveiled shadow budget that a new tax bracket be created for the highest-income earners, that capital income tax rates be raised and that the five per cent income tax deduction introduced for employers at the start of last year be abolished.
“How does the SDP think jobs are created?” Orpo asked, calling attention to the need to support businesses and improve their operating environment.
He also criticised the opposition party for spending the roughly 430 million euros in profits distributed by the Bank of Finland and Finnish Innovation Fund (Sitra). “It’s unfortunate that you can only use funds reserved for the future once,” he said.
The National Coalition Party has also questioned the Social Democrats’ claim that stepping up investments in efforts to combat the grey economy and tax avoidance would generate additional revenues of 300 million euros.
The Social Democrats’ shadow budget is neither credible, nor responsible, concluded Orpo.
“The expenditures have been underestimated and revenues maximised so that you could afford all your promises,” he stated. “The SDP’s alternative is unfeasible.”
Antti Rinne, the chairperson of the opposition party, has marketed the shadow budget as a means to improve the employment situation, cut central government debt, and reduce social and income inequalities. The Social Democrats, he underlined, is seeking to expand the tax base by, for example, levying a five per cent at-source tax on dividends paid by foreign funds and other associations exempt from the dividends tax.
“Do you really think an at-source tax targeted at foreign operators is genuinely unfounded?” he asked Orpo on Wednesday. “It’d create 400 million euros in additional revenues.”
Finance Finland, however, has expressed its reservations about the at-source tax, warning that it would not only discourage foreign investment in the country but also bring earnings-related pension funds under the scope of the tax, thereby creating pressure to raise pension contributions.
“If the profits of pension companies take a hit and there are no cuts in pensions, you’ll have to raise pension contributions,” Lea Mäntyniemi, a director at Finance Finland, told Uusi Suomi.
Aleksi Teivainen – HT
Source: Uusi Suomi