Savings | The government aims to save 100 million from the household deduction by planing, Suomen Yrittäjät criticizes the increase in the deductible

Government is aiming for savings of one hundred million euros by tightening the terms of the household deduction from next year. With the one that just ended in the statement round the planned actions were opposed by both the interest organizations of service producers and those who use them. No changes were made to the planned measures in Tuesday’s budget meeting.

The intention is to reduce the maximum amount of the deduction and reduce the compensation percentages. The deductible will be increased from one hundred euros to 150 euros.

The maximum amount of the deduction is proposed to be 1,600 euros instead of 2,250 euros, and the compensation percentage of workers’ compensation is 35 percent instead of 40 percent. In wages, the reduction would decrease by two percentage points and would be 13 percent.

At the same time, the increased household deduction for household, care and nursing work and physiotherapy and occupational therapy would end at the end of 2024.

The tightening is part of a wider package of tax changes, which also includes changes to, for example, income and pension income taxation.

A deduction Among others, the Taxpayers’ Federation, Finnish Entrepreneurs, Finnish Homeowners’ Association, the Finnish Chamber of Commerce, the Finnish Chamber of Commerce, the Welfare Industry, the Finnish Home Work Service Association and the Finnish Federation of Pensioners opposed the cuts.

The statements suspect that the strictures will accelerate the gray economy, weaken employment in the construction industry, cause people to postpone necessary renovations and cut back on maintenance, and make it difficult for the elderly to manage in their homes.

Suomen Yrittäjät especially considers increasing the deductible to be harmful. After the increase, many smaller jobs are excluded from the deduction.

“The proposal may have a negative effect on the fight against the gray economy, because there is no incentive to entrust the work to a company that fulfills its obligations in terms of work performed under the deductible,” states Suomen Yrittäjät.

The Confederation of Taxpayers considers the cuts to household, care and nursing work to be “completely unreasonable”. The organization calculates that this year you will benefit from the deduction if you purchase deductible work for more than 167 euros. After the surgeries, the services should be purchased for more than 429 euros.

Under renovation the weakening of the deduction will be smaller. The background is that the compensation percentage for household, care and nursing work has been temporarily increased to 60% until the end of this year. The maximum amount has also been temporarily increased to three thousand euros.

For renovations, the compensation has again been 40 percent and the maximum amount has been 2,250 euros since 2020.

The plumbing industry’s interest association LVI-Tekniset Urakoitsijat estimates that reducing the household deduction would have a direct negative effect on maintenance and basic improvement works in an otherwise difficult economic situation.

In the organization’s opinion, the model should be taken from Sweden, where you can deduct almost 6,600 euros from renovations and there is no deductible at all.

The same Swedish model is also recommended by the Specialized Trade Association. A planned change to Finland can be expensive and the savings missed.

“The decrease in renovation construction and the increase in the gray economy may reduce tax revenues more than the savings according to the government’s draft proposal,” the association estimates.

The wage earners’ central organizations fall into two camps when it comes to the household deduction. SAK and STTK consider tightening the conditions for household deductions as a justified way to save government spending, while Akava opposes it.

State the economic research center (VATT) points out in its statement that the household deduction has not been found in studies to bring new consumers to the group of users, so its employment effects seem to remain small. The deduction is used the most by households with high incomes, and approximately half a billion euros are spent annually to finance the current model deduction, VATT states.

“Reducing the household deduction in accordance with the government’s proposal is a good target for the adjustment of public finances. If additional adjustment items are needed, a further reduction of the household deduction could be a good item to consider,” VATT writes in a statement.