Sipilä and the incoming leaders of the new government outlined a plan to lower income taxes by some 450 million euros from next year.
The biggest income tax cuts would be felt by people earning 40,000 euros per year, but tax cuts are planned for incomes reaching as high as 110,000 euros annually.
20 percent tax on unemployment benefits
However, apparently taxes will not go down for people who receive unemployment benefits.
People who receive unemployment benefits from the state currently pay a flat 20 percent tax on that income.
Some people like Yvonne Kela, who’s been unemployed since 2011, finds the taxation on unemployment income troubling.
“It’s insane, there’s no logic in it,” Kela said. “I don’t see the purpose in paying that much tax and I don’t know who came up with it.”
Kela, who like all long-time unemployed in Finland, receives about 33 euros per day, five days a week.
Gun-Maj Granroth, who’s been unemployed for almost two years now, said she used to play 13 percent in taxes when she had a job with a higher income. But like everyone else in her situation, Granroth pays 20 percent tax on unemployment income.
Basic allowance tax
Daily allowances and labour market subsidies paid out by the social insurance institution Kela amount to some 33 euros per day, five days a week, amounting to some 650 euros per month.
That monthly income of 650 euros would be taxed at a rate of one percent - if it was earned working rather, than received through social benefits.
Most people whose incomes are at that minimum, long-time unemployed support level generally have to look elsewhere for to help make ends meet, like other social service offices.
Yvonne Kela, who also works a few days a week at a rehabilitation workshop where she earns a tax-free nine euros a day for, said the 20 percent tax on her unemployment benefits forces her to seek out social assistance.
“I’d probably be able to make it with unemployment and housing assistance money,” she said.
Many can't live on unemployment alone
Some 230,000 people in Finland currently receive labour market support, or basic unemployment allowance. Those without support from family or who are homeless almost always look to social services to survive.
Western Uusimaa social ombudsman Birgitta Gran said that she thinks the current tax system doesn’t benefit the state or people trying to get by on the lowest of unemployment assistance.
“It means a lot of extra hassle for both those who need help and for the system that has to treat people’s needs in many different ways,” Gran said, adding that she thinks it would be sensible to abolish the unemployment income tax.
“Everyone knows that they’re not living the high life on these incomes,” she said.
