Prime Minister Petteri Orpo (NCP) held a press conference in Helsinki on 12 December 2023. Orpo confirmed earlier this week that the government will also have to evaluate the need for tax hikes as it tackles its budget deficit. (Heikki Saukkomaa – Lehtikuva)

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PRIME MINISTER Petteri Orpo (NCP) has revealed that the government will decide not only on spending cuts but also on tax increases in the spring.

Although the government programme stipulates that the government must forgo policy measures that increase the total tax rate in Finland, Orpo on Tuesday told Helsingin Sanomat that the government has both the leeway and need to raise taxes.

“We’re forced to also examine the revenue side, meaning taxes. And we’ll have to raise some taxes,” he admitted in an interview with the newspaper.

The Ministry of Finance, he pointed out, has published a projection according to which the total tax rate will decrease during the course of the electoral term without government measures. Sources from the government have indicated to the newspaper that one option under consideration is raising the reduced value-added tax rates.

Minister of Finance Riikka Purra (PS) has repeatedly stressed that the government has to decide on substantial additional cost-cutting measures in order to, for example, avoid triggering the excessive debt procedure of the EU. The scope of the necessary cuts is around three billion euros, according to her and the Ministry of Finance.

“I don’t want to see Finland end up there,” said Orpo. “Finland has throughout its EU membership demanded that other countries look after their economies and play by the rules. It’s an impossible idea to me that we ourselves wouldn’t do so.”

While the prime minister declined to speculate on the extent of necessary cost savings, he did confirm that the evaluation will be based on figures presented by the Ministry of Finance.

“We’ll need an unambiguous figure that we can use as a basis. We’ll set the bar for the savings measures based on it. We shall see how harsh the reality is,” he commented.

If the government comes up with adjustment measures worth three billion euros, it would effectively signal the doubling of the adjustment measures laid out in the government programme.

Aleksi Teivainen – HT

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