Every autumn Finland's government agrees what next year's budget will look like. Leaders of the government parties, ministers and their aides gather at the Prime Minister's summer residence at Kesäranta and hammer out a deal. Because the government is always a coalition, and sometimes a large and diverse one, the discussions can be long and laborious--every partner needs a victory to show their supporters.
This year was no different, and late on Thursday the government announced that it had agreed how to run the country's finances next year. Ilta-Sanomat and Helsingin Sanomat have an extensive list of the winners and losers in the package, and it makes interesting reading.
Wage-earners will benefit from 515 million euros in tax cuts, which will leave a worker on the average monthly wage (3,300 euros) about 16 euros better off. Pensioners will also get 100 million euros in tax cuts, but the state pension will be cut.
Over-60s who've been out of work for more than five years will be allowed to retire as part of a so-called 'Lex Lindström' proposed by Employment Minister Jari Lindström.
Chickenpox vaccine
Planned increases in daycare charges will not go ahead, but cuts in support for stay-at-home parents will be implemented. There are cuts to inheritance and gift tax, elimination of the 'sweet tax', and a 50 million euro support package for farmers.
Tax on new cars is going to be reduced as planned--next year it will go down by about 210 euros on a new car costing 32,000 euros--but the tax on owning a car will go up by 36 euros and petrol will be 2.5 cents a litre more expensive.
Benefits for unemployed people and students will be cut, and boats and light motorised vehicles will be taxed. Mortgage interest tax relief will be cut, and tobacco tax will rise.
The government will also invest in a chickenpox vaccination programme which will--according to Iltalehti--save some 80,000 working days and 13.6 million euros in costs caused by parents taking time off to care for sick children.
Opposition criticism
The package was not well received by the opposition. Iltalehti reports that the SDP's leader Antti Rinne said that the government had decided to give a bit more to those who are already doing well--although he did agree that Lex Lindström and the cancellation of planned increases in daycare charges were both good moves.
Green leader Ville Niinistö said that the government's harsh values were on display in their cuts to support for students and the unemployed. Left Alliance chair Li Andersson agreed, saying the government missed an opportunity to increase demand by borrowing at low interest rates to invest in infrastructure.
Maaseudun Tulevaisuus, on the other hand, carried welcoming comments from farmers' lobbyist Juha Marttila, who said that a decision to delay higher space requirements on pig farms until 2024 was worth more than the 50 million euros in crisis support.
Municipal dispute still unresolved
Both Ilta-Sanomat and Iltalehti pondered the significance of the still unresolved dispute over cuts to municipal budgets. Unions in the sector have threatened to leave unsigned a deal on reducing pay to improve competitiveness if cuts to municipal budgets are in the budget.
IL said this matter had been 'swept under the carpet', with a verbal assurance from Prime Minister Juha Sipilä that the government would safeguard municipal finances. Teaching union boss Olli Luukkainen said that he hadn't seen any figures to reassure him, and that the competitiveness accord--which is due to be signed on Monday--hangs in the balance.
Ilta-Sanomat's Mika Koskinen argued that the government was hoist by its own petard after linking upcoming tax cuts to the competitiveness accord. Now unions have some kind of veto on some areas of government policy, and the government's hands are tied, says Koskinen. Big reforms aren't possible if everyone defends their own benefits and won't change anything for the common good.
