The Government will also foster the purchasing power of pensioners and low-income earners, promises Petteri Orpo (NCP), the Minister of Finance.
The Government will also foster the purchasing power of pensioners and low-income earners, promises Petteri Orpo (NCP), the Minister of Finance.

Petteri Orpo (NCP), the Minister of Finance, shed light on his budget proposal in a press conference on Thursday.

“We won't be making additional spending cuts even though our debt burden will grow marginally,” he commented on the 55.2 billion euro proposal that shows a deficit of roughly 5.9 billion euros and would raise the national debt burden to an estimated 111 billion euros in 2017.

There is light at the end of the tunnel despite the admittedly difficult economic conditions, assured Orpo. “I'm confident that the Government's decisions will bring about the economic growth and improvement in the employment situation needed to avoid additional spending cuts,” he stated.

He also conceded that with the near-term focus being on efforts to support the budding economic growth, the objective of reversing the debt trajectory of the country is unlikely to be met before 2017.

“We've seen a clear increase in the number of working hours. We must now boost the budding growth that's at the end of the tunnel,” said Orpo.

The Ministry of Finance reveals in a press release that the proposal would reduce tax rates for wage earners across income brackets by 0.5 percentage points and offer equivalent concessions to pensioners and low-income earners. The Taxpayers' Association of Finland has estimated that the income tax cuts will boost the purchasing power of the average earner by 150 euros in 2017.

“We'll also look after the purchasing power of pensioners. We'll target a tax concession at them that'll guarantee them the same tax concessions as wage earners,” said Orpo. “Because earners in the lowest income groups don't pay taxes, a cut in contributions worth 30 million euros will be targeted at the lowest income groups. How it'll be carried out requires some further preparation.”

Orpo estimated that the competitiveness pact that was reached after painstaking negotiations earlier this year will reduce the taxation of labour by 125 million euros.

“The Government will also target another tax concession, worth roughly 290 million euros, at small and medium-income earners that'll allow us to get to 0.5 percentage points in almost all income groups,” he stated. “We'll boost purchasing power, spur domestic demand, tear down obstacles to employment [and] reduce the tax wedge. That's a good thing.”

The income tax concessions, he underlined, will more than compensate employees for the decision to transfer of certain social security contributions from employers to employees.

The Government also announced that it will proceed with the cuts in social security benefits, unemployment security and student financial aid agreed upon before Orpo began his tenure as the Minister of Finance.

The Government will discuss the proposal in its budget session on 31 August—1 September and will unveil its final budget draft on 19 September.

Aleksi Teivainen – HT
Photo: Jussi Nukari – Lehtikuva
Source: Uusi Suomi