According to government sources, all parties will probably have to give up their former tax and austerity speeches. In April, the government will decide on cuts, the size of which may surprise, writes HS's political reporter Teemu Luukka in his analysis.
At least education or pensions that were under the government's special protection are not necessarily safe when the government decides in mid-April on new billion-dollar cuts and adjustments to the government's spending next year.
According to the information obtained by HS from several government sources, all government parties will have to cancel their previous speeches about which tax extortions and savings targets will not be considered under any circumstances.
If the parties are unable to do this, a government crisis is not far away, state two government sources.
It is stated from all government parties that in addition to the already decided billion savings, it is really difficult to find more cuts, so all government expenditure items are openly reviewed.
“This will not come together from small streams,” say a couple of government sources.
State the largest expenditure items are social and health expenditure, education, social security payments, pensions and defence.
Cuts have already been made to social security, and the growth rate of healthcare spending has been moderated. There is no cut in internal and external security.
Pensions and education remain the largest expenditure items.
However, it is emphasized from the governing parties that education cuts are avoided. Basic education is probably safe.
Over here until the government has left the pensioners somewhat completely outside of its austerity measures.
According to HS sources, pensions must also be considered now, even though the parties promised in the parliamentary elections not to cut pensions.
The Ministry of Finance has proposed and will certainly continue to propose cuts to pensions.
One way could be to cut the indexes that are checked annually for pensions to be paid. It wouldn't be unique, either Juha Sipilä The (central) government saved by freezing pension indices.
The government has already weakened several benefits with index cuts. Many have wondered why pensioners have been spared.
It would be a very bold decision, as old-age pensioners are a hard-working group of voters.
However, speculating about pensions is pointless because there are no political decisions, say three sources.
Decisions there are no savings yet.
There is still no information on the final amount of savings, and no negotiations have taken place. The amount depends, among other things, on whether Finland's economy starts to rise or not and what the EU's new debt rules will be in the end.
The Treasury minister Riikka Purra (ps) said In an interview with MTV on Saturdaythat the need for additional adaptation may be three billion in addition to the already decided six billion euros in this government term.
Sources interviewed by HS say that the need may rise even higher if the economy does not improve.
Purra estimates that spending may need to be cut by up to a billion euros. The amount can also be more.
Ministers have presented different estimates from one billion to three billion euros, but in some cases the numbers mean different things. Some means the entire rest of the government term, some next year and some just direct cuts and some the combined effect of cuts and tax increases.
Government has already made or is making adjustments to the state economy worth six billion euros, of which about four billion euros are cuts in public spending.
Several economists have criticized the government for not trying to improve the public finances with tax cuts, but for lowering taxation.
According to government sources, it is already certain that tax increases are also coming, even though the coalition has opposed them. On the tax side, things like raising value added taxes and taxation of foundations will come up. Taxation of work and companies is hardly touched.
The income of non-profit foundations and associations is often either fully or partially tax-free. In particular, Rkp opposes the taxation of foundations.
Saving lists and tax extortion will unexpectedly start to be considered by a group outside the government, consisting of members of parliament, on Tuesday of this week. Usually, the ministers' aides are looking for savings.
The group includes the chairmen of their parliamentary groups Matias Marttinen (cook), Otto Andersson (r) and Peter Ostman (kd) and MP for the Basic Finns Ville Vähämäki.
The group's work is assisted by the budget manager of the Ministry of Finance Mika Niemelän led by a group of civil servants that prepares an annual expenditure and structure survey.
According to HS's information, the group of civil servants has not yet distributed the actual cut options to the negotiators, but the governing parties have already split to some extent on where to find cuts.
WC published its previous cut proposal in March 2023.
This spring's possible spending savings can be guessed from the proposals already made by the Ministry of Finance, which the government did not implement in last spring's government negotiations.
The Ministry of Finance proposed tightening the value added tax, which, for example, in the case of food, means an increase in food prices.
Cultural actors should also be on their guard.
The Ministry of Finance calculated that funding for culture, sports and youth work could be gradually cut by 500–700 million euros. Some have already been implemented.
The ministry's list also included removing the deductibility of labor market organizations' membership fees, which would bring 220 million euros in savings to the state.
The coalition demanded this in government negotiations for a long time, but it did not materialize then.
The reduction of business subsidies is also under consideration, which is always talked about a lot when compiling cut lists. There is not much to expect in this field.
The Ministry of Finance and many researchers and working groups have proposed a tightening of dividend taxation for unlisted companies. It is especially difficult for the coalition to accept it.
One possible option is to change the taxation of unlisted companies, but for the assembly, that is an abomination. It could only succeed as part of a broader corporate tax reform.
According to sources, there is hardly any more to cut from social security than a few tens of millions of euros at most.
One of the big items is bus costs. Cutting through them is also difficult, because the condition of the road is miserable.
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The pressure to save comes from three directions.
VM has proposed that the state withdraw from the so-called hourly train between Turku and Helsinki.
For the coalition and the Prime Minister of Turku For Petteri Orpo Putting the Länsirada running between Helsinki and Turku on the shelf would be a tough one. The government has prepared to spend 460 million euros on the project, but it is one-time money and does not bring permanent savings.
In the opinion of basic Finns, development grants could still be cut significantly, but the money was already argued for so long in the spring that bringing the issue back to the table could lead to a government crisis.
Basic Finns are also strongly pushing for the weakening of Yle's funding. Rkp opposes this.
Saving pressure comes from three directions: from the government's own framework and deficit and debt policies and from the EU's new debt regulation.
The framework is the government's initial decision on the ceiling of state budget expenditures. The framework was created to maintain the government's spending discipline, but now it seems that savings of at least a billion euros should be found somewhere in order for it to be balanced.
Additional expenses are accumulating for next year because the welfare regions will probably run a deficit of at least 400 million euros more than the state has prepared for. The amount will be determined this week, and the state has promised to compensate the losses.
Another big reason is that next year the state is going to pay the municipalities 423 million euros less in state contributions than VM previously calculated.
If the state does not compensate the municipalities for the loss, the municipalities will probably have to cut back on education, as it is the municipalities' largest expenditure item.
Exceeding the budget framework cannot be financed by the state by raising taxes, because the framework takes into account only expenditures, not income. The more the framework is in the red, the more the government has to come up with new cuts.
Spending discipline in addition, the government's goal is to slow down indebtedness and bring the public finance deficit under control.
With these prospects, Finland is about to be subjected to the European Commission's so-called excessive deficit procedure, which has also been called being placed under observation.
To prevent this, the state may have to make savings or tax increases of more than a billion euros in order to keep Finland's debt at the level required by the EU. So this is in addition to the billion euros needed for the framework. There will be a need for more cuts in order to fulfill their promises on the public finance deficit.
The task is extremely difficult, but it is made easier by the fact that the government can also raise taxes to curb the growth of debts.
The government has room to play to the extent that taxation is decreasing by hundreds of millions of euros. It can cancel tax cuts or raise taxes.
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