The need for further negotiations on government policy was established in the spring, after a swift backlash rose against several proposed cuts to social programmes. The fact that two of the five parties also had a change in leadership in the cards was also a determining factor. Led by Prime Minister-designate Alexander Stubb, the specially-called government negotiations ended on Thursday in agreement, with all five political parties in the coalition agreeing to the new government programme.
The attending party leaders said the programme is based on structural policy decisions made by the former Prime Minister Jyrki Katainen's Government and its guidelines on implementing budgetary adjustment. The new Government line-up adds that it is determined to maintain economic policy stability in the country. In the reworked deal, all of the previously agreed-upon framework decisions will be complied with, culminating in the resolution of Finland’s debt, expected in 2018.
Infrastructure investment and new tax deductions
The new government programme commits to promoting major transportation infrastructure projects like the Pisara Rail Link loop in downtown Helsinki, the West Metro extension and a city tram line in Tampere. The Government also decided not to introduce a windfall profit tax. A 50 percent tax deduction on businesses' hospitality expenses will also be restored starting in 2015 in an effort to create jobs.
In a further attempt to increase consumer demand and household purchasing power, as well as improve employment prospects, the new government programme will introduce full adjustments on earnings levels and inflation for the three lowest income brackets in 2015 in the taxation of pensions and earned income, moving the scheduled freeze on such adjustments back to 2016. The status of families with small children will also be supported via the development of a system of tax deductions.
Alexander Stubb was pleased with the negotiations, which he says were conducted in good faith.
“We had three objectives. The first was that we stick to the framework. We succeeded in this goal. Our second objective was to tackle our debt. In this area we were also successful, as the forecast says we will be able to pay down state debt by 2018. Our third goal was to foster growth and employment. I sincerely hope that the measures and proposals in this new government programme will be successful in this endeavour,” he said.
