Energy Economists disagree over government energy subsidies for motorists: ‘Sprayed and shown by public authorities to compensate for everything’ – Opposition challenges government over petrol prices on Tuesday

Government presented the list on Friday compensatory measuresin which it seeks to respond to rising energy prices.

At the beginning of February, basic Finns asked an intermediate question about rising fuel and electricity prices. The Christian Democrats and the Movement Now are also involved in the interlocutory question. The intermediate question will be answered by the government in Parliament on Tuesday.

Read more: In this way, the parties would support those suffering from rising petrol prices – only three group leaders hesitate about the need for subsidies

HS asked four economists for their views on the compensatory measures imposed by the government on Friday.

The most significant of these measures is the temporary increase in the commute reduction.

In addition to the temporary measures, preparations will be launched for a professional diesel system and a new support system for households. The aim is to create a model in which support can be granted to households on an income and regional basis, in which a sudden rise in market prices would allow automatic income support to be paid to households.

Read more: Both the maximum amount of the commute reduction and the reduction per kilometer will increase – the government announced measures related to the increase in energy prices

Mika Maliranta, Director of the Laboratory of Labor and Economic Research Laboratory

Maliranta has reservations about policies aimed at correcting market changes, such as rising petrol prices.

Maliranta points out that the price of petrol will not be particularly high in the long term, given that, at the same time, earnings levels have risen and the efficiency of average cars has improved.

“In short, one hour of work can drive a car longer than in previous years. The situation is not bad. It has changed rapidly, but I do not think that is a sufficient basis for policy action. ”

Maliranta’s criticism is particularly directed at measures such as increasing the commute reduction.

“The direction is that the price of gasoline will rise in the coming years. It is part of a market mechanism that is moving towards a carbon-neutral society. ”

However, he emphasizes that raising commuting reductions does not directly reduce the incentive to seek to exit gasoline.

According to Maliranta, inequality should be curbed in a welfare society, but he would prefer to focus on maintaining social security. According to Maliranta, the government’s decisions will weaken the structural budget deficit.

“In any case, our social security system is under pressure through a structural deficit. Decisions of this type will similarly indirectly increase the pressure to make cuts to the social security system in later years. There is no need for those pressures any more than they are now, ”he says.

Sanna Kurronen, Economist of the Business Delegation (Eva)

Kurrosen according to which price fluctuations belong to a market economy and all consumers must be able to prepare for them. He also points out that, in terms of purchasing power, fuels are currently not exceptionally expensive.

“People also have to take responsibility for what kind of consumption choices they make in life. Public authorities cannot protect against every risk, and in no case should they be protected from such a risk, which is fully expected. ”

The government aims to halve traffic emissions this decade. According to Kurronen, this means that fuel prices will continue to rise in the future.

“The most important message that politicians could give would be that they would say openly that in the long run, letting go will be more expensive so that people can prepare,” Kurronen says.

According to Kurronen, compensating for the increase in fuel prices now sends the opposite message.

“Rather, the action is to spray and show that there will be no increase in the price of emissions, but that the public authorities will compensate for everything.”

Penna Urrila, Chief Economist of the Confederation of Finnish Industries (EK)

Urrila commends the fact that the measures decided by the government are temporary.

“I understand that the government is under strong pressure to find different solutions when citizens feel the price increase is sharp. The solutions made from this perspective are a reasonable compromise, ”he says.

“We don’t have a precise idea of ​​how the price of energy is evolving. This is better than building some more permanent mechanisms. ”

Urrila sees a lot of dangers in supporting households.

“It could lead to very difficult situations to predict. Fiscal planning and normal budgetary policy will become very difficult if a lot of such vending machines emerge. In addition, there is the fundamental question of how much the increase in prices should be offset by such targeted support, ”he says.

Urrila would prefer to emphasize income tax reliefs in the future.

“The effects of energy prices are widespread and are not limited to motorists. If it is to be remedied with targeted aid, it will not be very sustainable in terms of justice or climate. ”

Ilkka Kaukoranta, Chief Economist of the Finnish Confederation of Trade Unions (SAK)

Kaukorannan considers it a good thing that the government has reacted to the rise in prices so that the focus of compensation is on facilitating employment and compensation is limited.

In Kaukoranta’s opinion, reductions in business travel are also a more effective measure than, for example, a general reduction in income taxes.

“I think it’s justified to target compensation to those with high commuting costs,” he says.

However, Kaukoranta is concerned about the longer-term effects of the decisions on the financing of the welfare state.

“This shows that when our framework only applies to government spending but not taxes, it is politically easier to make even big tax cuts along the way. Of course, they weaken public finances, ”says Kaukoranta.

The professional diesel system under preparation is also being criticized by Kaukoranta. If permanent tax cuts or subsidies are to be made, Kaukoranta believes that there should also be an idea of ​​what other means are used to ensure that the services of the welfare state can be financed.

For example, the introduction of professional diesel would cost the Ministry of Finance approximately EUR 300 million.

Kaukoranta does not consider the household support system to be sensible.

“Basically, I don’t see the point in having the same people taxed for their work and then giving some lump sum refunds. By circulating money through the state, rising prices cannot be compensated as a nation. ”