Government disregarded the necessary structural reforms in the budget session

The Finnish Commerce Federation is disappointed that Finland’s structural problems were still not addressed in the budget session.

“In Finland, the cost of labour is high compared to the purchasing power of wage earners, and solving this problem concerning too wide and even multiple tax wedges in the service sector was not started. The structural problems related to unemployment security and work incentives were also ignored,” says Mari Kiviniemi, Managing Director of the Finnish Commerce Federation.

It is important to take care of the purchasing power of Finns with the lowest income, but the proposed increases in social benefits will worsen the various incentive traps with which hundreds of thousands of Finns are already struggling. Work competes with social security also in the commerce sector. A steady reduction in income tax would both mitigate the traps and support purchasing power.

“However, a permanent reduction in early childhood education fees is a positive measure that both supports families with children and mitigates incentive traps,” says Kiviniemi.

A reform of the unemployment security system and support for labour immigration would also have been matters of the utmost urgency. These reforms have already been postponed for too long.

No relief for the energy costs of the service sector

The Finnish Commerce Federation welcomes the Government’s temporary measures to compensate households for the increased energy costs, but they do not help with the rising electricity bills in the trade and service sectors. For example, a reduction in VAT on electricity will not reduce the energy costs of service companies.

The commerce sector considers it important that, in the future, energy tax solutions are aimed at reducing electricity tax on the trade sector and other service industries. The commerce sector still pays more than 40 times more in electricity tax than the industrial sector.

In addition, the decisions of the budget session did not take into account the significant waste heat potential of the commerce sector, which was almost one terawatt-hour. Utilising this potential would improve Finland’s energy self-sufficiency.

The commerce sector considers it positive that the Government aims to raise research and development expenditure to 4% of the GDP by 2030. The introduction of the R&D tax incentive is also welcome.

For further information, please contact:
Mari Kiviniemi, Managing Director, Finnish Commerce Federation, +358 (0)50 511 3189, mari.kiviniemi(at)kauppa.fi