It is important for the service sectors affected by the pandemic that the Government did not decide to increase taxes on earned income. In particular, the extension of the tax credit for household expenses will accelerate measures promoting low-carbon properties.
“It is a good thing that taxes on earned income will not increase. The extension of the tax credit for household expenses and the report on the inclusion of housing cooperatives in the tax credit are also positive solutions from a commerce perspective,” says Mari Kiviniemi, Managing Director of the Finnish Commerce Federation.
The Finnish Commerce Federation considers the investigation into the possible introduction of a health tax to be unnecessary, as it has already been done in the past. The tax would create substantial administrative costs for companies and there is insufficient evidence and information about its guiding effect.
The commerce sector regards safeguarding the police budget as a positive decision. Disruptive behaviour has clearly been on the increase recently and the coronavirus period has exacerbated the situation. Securing the budget will improve the situation.
“It is important for commerce that the additional resources for the police are visible in smaller localities, but also in areas where theft and disruptive behaviour are frequent,” says Kiviniemi.
Incentive traps still not addressed
Commerce is increasingly suffering from labour shortages. With regard to resolving the problem, the budget meeting’s decisions are twofold. Stepping up labour immigration and measures to help the Finnish Immigration Service overcome bottlenecks are welcome and necessary. Similarly, raising the income thresholds for students improves their situation by allowing them to increase their working hours. However, the decisions made do not mitigate the incentive traps in general, nor do they speed up the increase in the employment rate.
The Finnish Commerce Federation is disappointed in the Government’s decision to postpone other employment decisions until next year. For example, there is an urgent need for the reform of unemployment security in order to overcome labour shortages and increase employment, as well as for structural changes that increase employment rates and dismantle incentive traps.
“The Government should quickly start designing a model that makes it easier to combine social benefits and earned income, such as a basic account,” Kiviniemi continues.
More effort is needed in the digitalisation, internationalisation and climate work of commerce
In order for commerce sector companies to cope with increasingly fierce international competition, they should digitise and internationalise more strongly, for which the specialty goods trade in particular needs support. The Government did not provide solutions for this need, which is essential for the future of the commerce sector.
The Commission’s proposals in the recent Fit for 55 climate package will not only make the climate targets set for the service sectors more ambitious, but also increase the costs for commerce. As one of the key actions of the low-carbon trade roadmap, reducing the electricity tax in the service sector would contribute to the achievement of the sector-specific low-carbon targets and strengthen the international competitiveness of commerce. This was completely bypassed in the Government’s budget meeting.
Moving the heat pumps that produce heat for the district heating network to a lower electricity tax category will enable the integration of district heating and buildings’ own energy production and speed up the green transition.
“It is essential that the lower tax bracket includes heat pump units with a capacity of 25 kW, including commercial refrigeration systems. This would also allow the waste energy of commerce to be utilised in smaller localities,” Kiviniemi says.
Mari Kiviniemi, Managing Director, the Finnish Commerce Federation, tel. +358 (0)50 511 3189, mari.kiviniemi (at)kauppa.fi