Parties | Should taxation be tightened and how? This is how the parties respond

Parties from the coalition to the Sdp would adjust the state coffers by taxing tobacco and alcohol. Sdp, Vasemistoliitto and the Greens would like to intervene in the tax advantage of unlisted companies. Basic Finns would not raise taxes at all. No one would extort income taxes.

This is how the six largest parties answered when STT asked about their view on raising taxes. Concerned about the country’s indebtedness, the Ministry of Finance proposed in December that the state’s economy should be adjusted by tightening taxation in addition to spending savings.

The ministry did not present clear individual blackmail targets. However, it overshadowed the review of value added tax (VAT) reductions. Among other things, food, books and magazines, medicines and several cultural and sports services are taxed more lightly.

The major parties, with the exception of the Greens, are skeptical of the idea. Chairman of the party’s parliamentary group Atte Harjanten must be careful when the discount is truly justified.

“Increases in taxes would be in line with that, if we want to reduce the taxation of work and entrepreneurship. At the same time, you have to think carefully about maintaining fairness in society. It is known that if food becomes more expensive, those whose expenses make up the largest part of it will suffer the most,” says Harjanne.

In other parties, there is concern especially about increases for basic needs, such as food and medicine.

“The reduced VAT rates are justified and they have such a direct effect on the price of people’s basic commodities that we have not wanted to adjust them,” says Sdp’s vice-chairman Matias Mäkynen.

Of the parties the center, the coalition, Sdp and the greens would seek help from so-called nuisance taxes to balance the budget.

In this case, the coalition stands out in particular, which has talked about additional taxation of 900 million euros in this area: the tobacco tax would be increased by 400 million and the alcohol tax by 200 million. In addition, the party would create a new health-based tax on products that contain significantly unhealthy ingredients.

In other parties, the amounts are smaller. Sdp has proposed an increase in the level of disadvantageous taxes, which would take into account the rise in prices. According to the party, this would be around 500 million euros.

“Hundreds of millions can certainly be collected from these negative taxes, but it may be that the coalition’s collection is a bit boldly estimated,” says the centre’s Eva Kalli.

Many group leaders point out that if negative taxation does its job, consumption and thus the state’s tax revenue will decrease. The most critical towards the opening of the coalition is the left-wing coalition Jussi Saramowhich does not talk at all about raising negative taxes.

“Tobacco is already so expensive that with the new increase, the tax revenue could decrease if smoking cessation or imports from Estonia become more common. Harmful taxes can have other good effects, but they will not fix the state economy,” says Saramo.

Mäkynen and Kalli say that their parties are also open-minded about the new health tax. However, the parties do not outline how the arrangement would be implemented exactly. In the last election period, the parliament stopped the so-called sugar tax citing EU rules. The new company is scrutinized precisely from the point of view of sugar or salt.

“Today, the EU requires sugar content in food packaging. In the past, it has fallen into the fact that the collection of data has been considered too complicated, but nowadays it is already produced for other reasons”, group leader of the coalition Kai Mykkänen says.

Remember unlike the parties, in the economic policies of the Left Alliance and Sdp, tax increases are adjustment measures in a more significant part than cuts.

At best, both aim for additional income of up to 500 million euros by reforming the dividend taxation of unlisted companies. They consider the current system inappropriate. Saramo calls the system a tax planning tool, the benefit of which requires accumulated wealth and income greater than the median earnings.

Mäkynen points out that the model has also received criticism from economic experts. Last month, the Economic Policy Review Council proposed limiting the current relief.

“The reform can be done in several different ways and also in such a way that low-income entrepreneurs could continue to benefit from it. We are not proposing to remove it completely,” says Mäkynen.

Harjanne says that the Greens are also ready to intervene in the system that has received criticism, but does not comment on the matter in more detail. The center and the coalition oppose the idea, citing that they do not want to tighten the taxation of entrepreneurship.

“The model encourages the financing of strong balance sheets. Now in crises it has been seen that the company can withstand shocks better when the balance sheet is in order,” says Kalli.

From among basic Finns stand out, who would not adjust the state economy by raising taxes at all.

“Our attitude towards tax increases is very negative,” the leader of the parliamentary group Ville Tavio says.

The party would balance the budget imbalance purely with cuts. Tavio cites billions in development aid and 36 million in party support as examples. In addition, the party has maintained that they should be done in all administrative sectors by 2–4 percent.

Tavio answers the question about coordinating different positions with other parties, that politics is always about making compromises.

“Where the savings targets of basic Finns are successful”, I would be ready to discuss the savings targets of other parties and these taxes as well.

Despite the tax increases, other parties are also critical of the fact that Finland’s overall tax rate would increase. The Ministry of Finance estimated in December that Finland’s tax rate will decrease without new measures.

“All means are needed for adjustments: spending savings, tax increases, and growth and productivity. A large part of the need for adaptation must be handled with cost savings. Tax increases are not the main solution, because it is easy to fake,” says Kalli.

The ministry urged to avoid additional taxation of work, and parties from left to right agree on this.

“We start from the fact that in Finland we cannot afford to raise taxes on work and entrepreneurship, in which case we have to go through taxes on consumption,” says Mykkänen.

The coalition has proposed a reduction of one billion for labor taxation. From many other parties, the opening, which reduces the state’s income, is puzzled, while at the same time the economic deficit is being discussed.

“In this adjustment situation, massive tax reductions cannot be promised,” says Harjanne, who is in favor of a moderate reduction.