The income tax cuts planned for next year will not suffice to offset the rises in social security contributions, says Teemu Lehtinen of the Taxpayers’ Association of Finland. (Mesut Turan – Lehtikuva)


THE TAX BURDEN of Finnish middle and high-income earners will grow considerably as of next year due to an increase in social security contributions, predicts Teemu Lehtinen, the managing director of the Taxpayers’ Association of Finland.

The contributions, he explained in a press release yesterday, cannot be offset with the income tax cuts laid out in the budget proposal of the Ministry of Finance.

“We are heading towards increasingly uncertain economic times, while the autumn’s collective bargaining talks are looming over the labour markets. Slashing the net income of wage earners by raising income taxes is the absolute last thing,” said Lehtinen.

“The government must take resolute action in its budget session in September to remove all pressure to raise income taxes with sufficient compensatory cuts.”

The Finnish government has announced its decision to reduce income tax rates for low and middle-income earners by a total of 200 million euros in 2020, a move that will increase tax progression noticeably according to the Taxpayers' Association.

“Limiting the cuts strictly based on earnings is not justified in any way,” said Lehtinen.

The Taxpayers’ Association also expressed its concern about the proposal to reduce the tax credit for household expenses from a maximum of 2,400 euros to 2,250 euros. The government is planning on slashing the tax credit from 50 to 40 per cent for expenses related to expenses subjected to value added tax and from 20 to 15 per cent for wages and related social security expenses.

“Reducing the tax credit for household expenses is unjustified and a clear disappointment in this budget draft,” said Lehtinen.

He also voiced his approval of shifting the emphasis of taxation away from earned income towards harmful products such as tobacco and soft drinks. The government is to raise 50 million euros by raising taxes on tobacco products and 25 million euros by raising taxes on soft drinks in 2020.

“It is better to tax harmful than useful things, like working,” he argued.

Aleksi Teivainen – HT
Source: Uusi Suomi