Private services account for half of Finland’s gross value added, i.e. the country’s economic well-being, and have a significant impact on economic growth and employment. As in recent years, price inflation undermines the ability of private services to act as a driver of economic growth, while the purchasing power of Finns is weakening.
“One of Finland’s major structural problems is weak purchasing power compared to the price of labour. Reversing the trend requires bold but necessary decisions from the Government in the budget session,” says Mari Kiviniemi, Managing Director of the Finnish Commerce Federation.
Equal tax reductions, including for low-income earners, will be achieved through combined changes to the basic deduction, the credit for work income and the state income tax scale. Reducing income taxes would reduce the tax wedge on labour, reduce incentive traps and improve purchasing power without increasing salary costs.
“The long-term reduction of labour taxation is an important structural reform in order to safeguard purchasing power and dismantle incentive traps. Dismantling incentive traps simultaneously supports employment and the availability of labour,” says Kiviniemi.
Energy solutions strengthen the competitive strength of the commerce sector and Finland’s energy self-sufficiency
The energy crisis is burdensome to the commerce sector as well. Electricity tax is divided into two categories, and commerce, along with consumers and other service industries, falls under category 1, meaning that they have to pay more than 40 times more electricity tax than the industrial sector. The Finnish Commerce Federation proposes to reduce the electricity tax on the commerce sector and service sector to the level of the industrial sector in the long term.
“A lower electricity tax will make it possible to achieve the carbon neutrality targets of the commerce sector, safeguard jobs in the commerce sector and promote competitive strength in relation to international online stores seeking to gain market share in Finland,” says Kiviniemi.
In addition, the waste heat from the commerce sector should be utilised much better. The waste heat potential of the commerce sector is as much as one terawatt-hour per year, which corresponds to the volume of biogas production in Finland. The largest untapped waste heat potential in the commerce sector is in refrigeration systems in the grocery trade (800 GWh/year). Another significant source of waste heat is the cooling energy of shopping centres (113 GWh/year).
“Utilising the waste heat of the commerce sector would boost Finland’s energy self-sufficiency and support the production of zero-emission energy across sectors as well as the achievement of climate targets. The Government must accelerate the development of a two-way district heating network so that waste heat can be utilised,” says Kiviniemi.
In its autumn budget session, the Government must finally tackle Finland’s structural problems with determination to secure the purchasing power of Finns, the competitive strength of the commerce sector and economic growth in the future.
For further information, please contact:
Mari Kiviniemi, Managing Director, Finnish Commerce Federation, +358 (0)50 511 3189, mari.kiviniemi(at)kauppa.fi
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